APFSOS II​-Greater Mekong Subregion report.pdf - GMS-EOC

RAP PUBLICATION 2011/04ASIA-PACIFIC FORESTRY COMMISSIONFORESTS AND FORESTRY IN THE GREATERMEKONG SUBREGION TO 2020SUBREGIONAL REPORT OFTHE SECOND ASIA-PACIFIC FORESTRY SECTOR OUTLOOK STUDYFOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONSBangkok, 2011

The designations employed and the presentation of material in this informationproduct do not imply the expression of any opinion whatsoever on the part of theFood and Agriculture Organization of the United Nations (FAO) concerning the legalor development status of any country, territory, city or area or of its authorities, orconcerning the delimitation of its frontiers or boundaries. The mention of specificcompanies or products of manufacturers, whether or not these have been patented,does not imply that that these have been endorsed or recommended by FAO inpreference to others of a similar nature that are not mentioned.The views expressed in this information product are those of the author(s) and do notnecessarily reflect views of FAO.All rights reserved. FAO encourages reproduction and dissemination of material inthis information product. Non-commercial uses will be authorized free of charge uponrequest. Reproduction for resale or other commercial purposes, including educationalpurposes, may incur fees. Applications for permission to reproduce or disseminate FAOcopyright materials, and all other queries concerning rights and licenses, should beaddressed by e-mail to copyright@fao.org or to the Chief, Publishing Policy and SupportBranch, Office of Knowledge Exchange, Research and Extension, FAO, Viale delle Termedi Caracalla, 00153 Rome, Italy.The analyses and assessments contained in this report are those of the authors and donot necessarily reflect the views and policies of the Asian Development Bank (ADB) orits Board of Governors or the governments they represent.The ADB does not guarantee the accuracy of the data included in this publication andaccepts no responsibility for any consequences of their use.Use of the term “country” does not imply any judgment by the authors or the ADB as tothe legal or other status of any territorial entity.Boundaries of all maps contained in this report should not be considered authoritative.All information contained in the maps have a high degree of generalization owing tothe small scale of data sets used for map compilation.For copies, write to:Patrick B. DurstGMS Environment Operations CenterSenior Forestry OfficerThe Offices at Central World, 23rd FloorFAO Regional Office for Asia and the Pacific 999/9 Rama 1 Road, Pathumwan39 Phra Atit RoadBangkok 10330 ThailandBangkok 10200Tel: (662) 207 4444ThailandFax: (662) 207 4400Tel: (66-2) 697 4000E-mail: info@gms-eoc.orgFax: (66-2) 697 4445Web: http://www.gms-eoc.orgE-mail: patrick.durst@fao.orghttp://www.fao.org/asiapacific/forestry-outlookPrinted and published in Bangkok, Thailand.2011 © FAOISBN 978-92-5-106793-2

FOREWORDTwelve years after the publication of the first Asia-Pacific Forestry Sector Outlook Studyin 1998, FAO welcomes this opportunity to once again contribute, at the behest of theAsia-Pacific Forestry Commission, to the regional forestry dialogue. Countries and theirforestry sectors are becoming ever more closely linked as economic liberalization andregional integration accelerate. Since the first outlook study, it has become increasinglyclear that a regional perspective is essential in negotiating a better position for forestryand the values with which it is associated. With the advancement of globalization someof the most important effects on forests and forestry in many countries in the region arethe result of international and regional developments.Heightened awareness of the values of forests and their greater inclusion in internationalclimate change agreements has increased the importance of linking spatial levels andbroadening understanding of issues and opportunities likely to affect forestry in thecoming years. Identification of key trends in forestry – both physical and political – andconstruction of scenarios for the future adds a valuable dimension to regional forestrydiscussions. Building responsiveness into institutional mechanisms and adapting tochange constitutes one of the most important steps in creating a robust sector in a fastevolvingworld.Great changes have occurred and major advances have been made in Asia-Pacificforestry since the first outlook study was published. Significant challenges remain inmany parts of the region and it is increasingly evident that countries cannot developforestry policies in isolation – rights and responsibilities are increasingly spilling acrossborders and across sectors as populations increase, demands on resources heightenand economies integrate. The collegial nature of the process through which this outlookstudy was developed gives credence to the success of collaborative regional action andsharing in a common future. By openly contributing information, the countries andorganizations involved in the outlook study have demonstrated their commitment tothe future of forests and forestry and their desire to improve upon the benefits fromforests that the current generation has received.Many organizations and individuals have put huge effort into this study and have goneto considerable lengths to share the fruits of their experiences. In bringing togetherthis subregional report, five country reports and over 15 thematic studies have beenprepared. The first Asia-Pacific Forestry Sector Outlook Study provided a benchmarkin regional and global forestry and was followed by a series of regional outlook studiesaround the world. We hope that this subregional study will be as well received and thatthis contribution to the region’s forestry sector is both timely and appropriate and willchallenge countries to build forests that future generations will value.Hiroyuki KonumaAssistant Director-General and Regional Representative for Asia and the PacificFood and Agriculture Organization of the United Nationsi

CONTENTSFOREWORD ........................................................................................................................ iACKNOWLEDGEMENTS .................................................................................................. viiEXECUTIVE SUMMARY .................................................................................................... ix1. INTRODUCTION ......................................................................................................... 11.1. Background ...............................................................................................................................31.2. Scope and audience ...............................................................................................................31.3. Structure of the report ..........................................................................................................42. STATUS AND TRENDS IN FORESTS AND FORESTRY .................................................52.1. Trends in forest resources ....................................................................................................7Changes in forest cover 7Changes in growing stock 14Status and trends in production forests 15Forest health and vitality 212.2. Wood and wood products ................................................................................................ 23Recent market developments 25Trade in forest products 30State of forest industries and wood-processing technology 32Contribution of forestry to national economies 332.3. Non-wood forest products ............................................................................................... 352.4. The service functions of forests ...................................................................................... 39Conservation of biodiversity 41Forests and climate change 47Forests and water 552.5. Wood as a source of energy ............................................................................................. 60Extent of wood energy use 60Factors affecting future wood energy use 632.6. Forest tenure and ownership .......................................................................................... 642.7. Policy and institutional framework ............................................................................... 69Cambodia 69Lao PDR 70Myanmar 71Thailand 72Viet Nam 732.8. Progress towards sustainable forest management ................................................. 743. KEY DRIVERS OF CHANGE ....................................................................................... 813.1. Demographic changes .......................................................................................................823.2. Economic changes ............................................................................................................... 85iii

Income 86Structural changes in economies 90Economic viability of forest management 913.3. Trade ......................................................................................................................................... 933.4. Agricultural expansion ....................................................................................................... 953.5. Infrastructure development ............................................................................................. 97Roads 97Dams 1003.6. The political and institutional environment ............................................................101Trends in governance 101Forest law enforcement and governance 1044. PROBABLE SCENARIOS AND THEIR IMPLICATIONS ............................................1074.1. Rationale and methodology ..........................................................................................1084.2. Parameters used in defining scenarios ......................................................................1084.3. Development scenarios ...................................................................................................108Hard times (Socio-economic development stalls) 110Overburn (Unsustainable growth) 111Slow and steady (Sustainable development) 112Living on the edge (High-growth development) 1135. FORESTS AND FORESTRY IN 2020 ........................................................................1155.1. Forest resources ..................................................................................................................116Forest cover 117The production and protection roles of forests 121Forest health and vitality 123Extent of forest area under sustainable management 1245.2. Wood and wood products ..............................................................................................126Production, consumption and trade of forest products 128Overview of the future forest products supply-demand balance 1335.3. Non-wood forest products .............................................................................................1345.4. Service functions of forests ............................................................................................135Biodiversity 135Forests and climate change 136Forests and water 1385.5. Wood as a source of energy ...........................................................................................1385.6. Overview of forests and forestry in 2020 ..................................................................1396. BRINGING ABOUT CHANGE...................................................................................1416.1. Priorities .................................................................................................................................1416.2. Strategies ...............................................................................................................................143Recapitalize forest resources 143Conserve forest biodiversity 144Utilize available incentives 145Involve stakeholders 146Reinvent forestry institutions 147iv

Revitalize field-level forestry 148Improve education 149REFERENCES ................................................................................................................. 153v

BOXESBox 2.1. Understanding forest resource statistics 9Box 2.2. Forest cover change and the logging ban in Thailand 13Box 2.3. Thailand’s response to dependence on wood product imports 18Box 2.4. Plantation development in Lao PDR and Viet Nam: struggling to meet demand 19Box 2.5. Forecasts and reality – how good were forest products production predictionsmade in 1998? 24Box 2.6 Guangxi’s forest products industry booms despite market conditions 26Box 2.7. NWFP management in Viet Nam – from national to local levels 38Box 2.8. Payments for environmental services 39Box 2.9. Biodiversity crisis in Southeast Asia 41Box 2.10. Protected areas and investment in the lower Mekong countries 44Box 2.11. Protected area management in Cambodia 45Box 2.12. The nature of climate change impacts in Asia 48Box 2.13. Major technical issues facing REDD 52Box 2.14. The technical and political importance of forests and water 56Box 2.15. Watershed-based payments for environmental services in Southeast Asia 59Box 2.16. Woodfuel and biofuel use in Myanmar. 61Box 2.17. The contribution of forest land allocation in Viet Nam to SFM, livelihoodsand wood production. 66Box 2.18. Forest cover in Lao PDR 71Box 2.19. Certification of forest management in the GMS 79Box 3.1. Developments that may affect progress with SFM 82Box 3.2. The Asian economic crisis and deforestation 89Box 3.3. Changes to import restrictions in the European Union and United States 94Box 3.4. Dam construction and forestry in Lao PDR 100Box 5.1. The outlook for forestry in Myanmar 119Box 5.2. Forest products production, consumption and trade forecasts – key assumptions 128Box 6.1. Priorities during forest transitions 142vi

ACKNOWLEDGEMENTSFAO expresses sincere appreciation and gratitude to all who contributed to the GreaterMekong Subregion report of the Second Asia-Pacific Forestry Sector Outlook Study(APFSOS). In doing so, FAO recognizes that contributions have been far wider than thelist provided here. Many unidentified contributors provided information, advice andopinions during seminars and workshops, the preparation of working papers and thefinal report. Thanks are offered to all these people and agencies.The strong support given by member countries toward the completion of the APFSOSis reflected by the nearly universal preparation of country outlook studies by GreaterMekong Subregion member countries of the Asia-Pacific Forestry Commission. Manycountries also provided comprehensive reports and recent documentation on nationalpolicies, strategies and actions and shared relevant data with the outlook team.Governments in the subregion nominated national focal points who met early in theprocess to discuss their roles and to agree upon a common national report structure. Thenational focal points were instrumental in running national-level outlook consultationprocesses, collecting country-level data and information, clarifying issues and verifyingstatistics and coordinating submission of country outlook papers.Valuable support for the APFSOS was also provided by partner agencies withinand outside the subregion. These include the Asian Development Bank (ADB); theInternational Tropical Timber Organization (ITTO); The Center for Forests and People(RECOFTC); and The Nature Conservancy (TNC).The implementation of the overall regional outlook study was endorsed by the twentyfirstsession of the Asia-Pacific Forestry Commission, which was chaired by Shri J.C.Kala (Director-General of Forests and Special Secretary, Ministry of Environment andForests, Government of India); and reviewed at the twenty-second session chaired byMr Nguyen Ngoc Binh (Director-General, Forest Department, Ministry of Agricultureand Rural Development, Government of Viet Nam).Implementation of this subregional study was coordinated by Jeremy Broadheadand assisted by CTS Nair, Patrick Durst and Chris Brown under the supervision of HeChangchui, Michael Martin and Hiroyuki Konuma. Implementation was overseen bya Scientific Steering Committee comprised of Sairusi Bulai (Secretariat of the PacificCommunity); Neil Byron (Australia Productivity Commission, Government of Australia);Barney Chan (eSFM Tropics, Malaysia); Lu De, Bai Weigao and Zhang Zhontian (StateForestry Administration, Government of China); Steve Elliott (Forest RestorationResearch Unit, Chiang Mai University), Steven Johnson (International Tropical TimberOrganization); Togu Manurong (Bogor Agricultural University, Indonesia); Kaosa-ardMingsarn (Chiang Mai University, Thailand); Javed Mir (Asian Development Bank); RamPrasad (Indian Institute of Forest Management); Victor Ramos (Secretary of Environmentand Natural Resources [retired], Philippines); Tonny Soehartono (Ministry of Forestry,Indonesia), Rowena Soreiga (Asia Forest Network); Takako Teranishi and Hiro Miyazono(International Forestry Cooperation Office, Japan); James Turner (Scion Research) andCTS Nair, Patrick Durst, Purushottam Mudbhary, Aru Mathias, Jeremy Broadhead, ChrisBrown, Rebecca Rutt and Akiko Inoguchi (FAO).Also thanked for their generous provision of data and information in support of theoverall study are Arvydas Lebedys, Mette Løyche-Wilkie and Orjan Johnson (FAO Rome);vii

Richard Vout (FSC), Steve Johnson and Lauren Flejzor (ITTO); Lucy Fish (UNEP WCMC),and Ernie Guiang (FAO Viet Nam).National reports were submitted by government forestry agencies from nearly allcountries in the subregion; staff, consultants and other contributors to these reportsare attributed in those documents and thanked for their efforts. Additional thematicworking papers were contributed by: Romulo Arancon (Asian and Pacific CoconutCommunity), Bijendra Bisnayat, Michael Canares, Moushumi Chaudhury, Tini Gumartini,Regina Hansda, Meng Linlin, Andrew MacGregor and Chris Perley; Mark Sandiford, YurdiYasmi and Thomas Enters (RECOFTC); Daisuke Sasatani (CINTRAFOR); Sim Heok-Choh(APAFRI); the Asia Forest Network (AFN); and Akiko Inoguchi, Ragnar Jonsson and AdrianWhiteman (FAO). Inputs were also received from David Cassells, Cole Genge, FrancisHurahura, Yudi Iskandarsyah, Tint Thaung, Gunawan Wicaksono and Chen Xiaoqian(TNC); Coi Lekhac (WWF), Gem Castillo, Ben Hodgdon, Serey Rotha Ken, Top Khatri, RaoMatta, Preecha Ongprasert, Sithong Thongmanivong and Pei Sin Tong.The following individuals served as National Focal Points or participated in NationalFocal Points’ meetings: Khorn Saret (Cambodia); Sophal Chann (Cambodia); ThongphathVongmany (Lao PDR); Somchay Sanontry (Lao PDR); U Sann Lwin (Myanmar); MaungMaung Than (Myanmar); Prapun Tanakitrungruang (Thailand); Pichart Watnaprateep(Thailand); Chudchawan Sutthisrisilapa (Thailand); Jerdpong Makaramani (Thailand);Nguyen Hoang Nghia (Viet Nam); Pham Duc Chien (Viet Nam); and Vo Dai Hai (VietNam).This subregional report was written by Jeremy Broadhead assisted by Patrick Durst, ChrisBrown and CTS Nair. The report was edited by Robin Leslie and formatted by Chanida‘Tammy’ Chavanich. Great appreciation is extended to Iain Watson and ChonchineeAmawatana of Environment Operations Center, Asian Development Bank recognizingtheir overall support to the study process including contributions to editing andfinalizing the report. Thanks are due to the Forestry Staff of the FAO Regional Office forAsia and the Pacific and the Forestry Department, FAO, Rome several of whom assistedwith this study. Finally, special thanks go to FAO Bangkok staff who worked to provideessential secretarial support: Kallaya Meechantra and Sansiri Visarutwongse, and toJanice Naewboonnien for proofreading.viii

EXECUTIVE SUMMARYEXECUTIVE SUMMARYForest cover in the Greater Mekong Subregion (GMS) is projected to fall by 0.9% between2010 and 2020. Losses totalling 4.8 million hectares are forecast for Lao PDR (-1.0m ha),Myanmar (-2.5m ha) and Cambodia (-1.3m ha) while in Thailand (1.0m ha) and Viet Nam(3.1m ha) forest area is predicted to increase by a total of around 4 million hectares.Between 1990 and 2010, excluding Viet Nam, the forests of the GMS contracted in sizeby 12.5 million hectares, an area greater than half that of Lao PDR. The annual rate offorest loss, however, fell from -0.8 to -0.6 percent. At the same time, forest area in VietNam increased by 4.4 million hectares. Despite these encouraging figures, the rate andextent of degradation of natural forests remains masked by broad definitions of “forest”and inadequate statistics. Available information suggests, however, that throughoutthe region forests are becoming increasingly degraded. Unless action is taken to addresskey drivers of change in forests and forestry, many countries will fall short of forest covertargets and values associated with forests will be lost.Projected reductions in forest area between 2010 and 2020 equate to estimated lossesof 0.27 giga tonnes CO 2equivalent – 11% more than Viet Nam’s total CO 2emissions for2005. With forest conversion the primary driver of biodiversity loss, estimates are thatin Southeast Asia as a whole, between 13 percent and 42 percent of species will be lostby 2100, at least half of which could represent global extinctions (Sodhi et al. 2004).While large tracts of forest have conferred an advantage to forest products industries,declining roundwood production and competition from plantation-rich countries andwell-equipped, low cost wood processors outside the subregion also threaten the longtermfuture of forest industries.Infrastructure development, expansion of industrial agriculture and population growthhave been primary drivers of change in the subregion and will continue to threaten forestresources. Across the GMS, roading developments have provided access to marketsfor many isolated populations and have also increased opportunities for investmentand trade. At the same time, forest resources have been depleted as loggers, farmers,agribusinesses and developers have moved in. Areas particularly affected includethe northwest and southern parts of Lao PDR and northeast Cambodia. In Lao PDR,Cambodia and Viet Nam, protected areas adjacent to areas of development are alsothreatened by biodiversity and resource loss.With expansion of infrastructure, investment in agriculture has expanded andestablishment of cash crop plantations has become a primary driver of forest conversion.Deforestation and loss of canopy cover has been particularly intense in Myanmar whilesmaller scale forest loss in Lao PDR, Viet Nam, Cambodia has also been recorded. Theproduction of rubber, cashew nuts, coconut and sugar cane has been a major cause offorest conversion while in coastal areas shrimp ponds and agriculture have resulted inthe loss of mangroves. Rubber and oil-palm have been important crops in terms of forestconversion. In northern areas of the subregion rubber plantations are being established,particularly in sloping areas, and in southern Thailand and southern Myanmar, oil-palmestablishment has been an important cause of forest conversion.While road networks and industrial agriculture expand, populations are also increasingrapidly and between 2010 and 2020, the population of the GMS is projected to increaseby 10 percent to 249 million. Pressure on resources is set to increase but several factorsEXECUTIVE SUMMARYix

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportEXECUTIVE SUMMARYmay attenuate tendencies towards deforestation and degradation. Structural changesin economies towards industry and services and away from agriculture, and migrationtowards urban centres could reduce pressure on land. In several countries migrationoverseas for more remunerative employment is having a similar effect while remittancepayments are increasing income in rural areas and allowing investment in lowmaintenance, longer term tree crops. Environmental shocks have played a pivotal rolein reversing trends in forestry in several countries in the Asia-Pacific region, including inthe GMS, and similar responses may gain ground in the coming years.Two GMS countries have begun to follow distinct forest cover trends, owing to theseand other effects. In Thailand, the agricultural frontier has, to a lesser or greater extent,been closed and forests are regrowing on former agricultural land. Decoupling betweenforest area and key variables driving deforestation suggest that a forest transition is inits first stages. In Viet Nam, large government-supported afforestation and reforestationprogrammes are resulting in forest expansion, although, as in almost all countriesin the subregion, primary forests are still being lost at high rates. In other countries,relationships between forest area and key drivers of deforestation remain essentiallyunchanged.While economic growth has progressed rapidly for much of the past decade, standardsof governance have fallen across much of the subregion. Despite increased attention toforest law enforcement and governance, significant changes on the ground have beenslow in developing. Largely to blame are conflicting priorities, lack of resources andthe reluctance of vested interests to stem the flow of forest products. Trade measuresrelated to legality of wood and wood products imports in high-paying markets haveconsiderable potential to influence the subregion’s forestry sector and wood industriesin the coming years. These efforts have the potential to revitalize efforts to strengthenforest law enforcement and governance efforts and stimulate action to improve forestmanagement.The GMS forest product industry is likely to be particularly affected by growing concernover trade legality and sustainable resource management in the European Union (EU)and United States. By value, 5 percent of GMS forest products and 75 percent of totalwooden furniture exports went to markets in the EU and United States in 2007. Themost significant exporter to the EU and US was Viet Nam with wooden furniture exportsexceeding 2 billion dollars. In relation it is possible that if legality and sustainabilitystandards do not improve, accessing these high paying markets may become moredifficult and buyers may even turn away from tropical timber products from thesecountries and others. Preferences for lighter coloured woods in these markets couldalso drive a more general shift away from tropical hardwoods. Under such a scenario,sustained high levels of economic growth in the Asia-Pacific region may maintaindemand, although preference for domestic processing in China and current lowwage rates could challenge less efficient wood products producers in GMS countries.Although the impacts of trade legality measures are not yet clear, efforts to improveforest law enforcement and governance will be valuable not only in maintaining accessto markets but also in maintaining the value of, and conserving, remaining naturalforest resources.In addition to competition from plantation-rich countries and efficient, low cost woodprocessors outside the subregion, doubt over the economic viability of sustainablemanagement of natural forests for production in the GMS also constitutes a seriousconcern for production forestry in the subregion. Overharvesting and high grading,multiple re-entry to logging coupes and lack of implementation of reduced impactlogging techniques have all reduced the value of forests. In many areas forest protectionx

EXECUTIVE SUMMARYand rehabilitation are essential to increase growing stock and provide time to addressdestructive logging practices. Reversing current trends will require significant investmentin resource supply, renovation of production facilities and improved governance andinstitutional performance.Greater inclusion of forests and forestry in international climate change-relatedagreements is anticipated as a means of supporting a transition towards forestproduction and increased focus on forest environmental services in countries whereexploitative use of forest continues and local demand for forest services remainsundeveloped. Reduced Emissions from Deforestation and forest Degradation (REDD)+in particular offers the possibility of substantial income from reducing emissions fromdeforestation, forest degradation and conservation of forest carbon stocks, sustainablemanagement of forests and enhancement of forest carbon stocks. High demand forland and forest products, low institutional capacity and poor governance, particularlyin low income high forest cover countries, as well as the deeply entrenched socialcauses of deforestation and forest degradation, suggest, however, that reductions indeforestation and degradation will be hard won.SCENARIOS FOR 2020In view of the most influential drivers of change for forestry in the subregion, fourscenarios for 2020 are presented. Scenarios are developed on the basis of varyinglevels of aggregate demand and institutional effectiveness. Associated factors such asagricultural expansion and infrastructure development as well as independent variablesincluding environmental disasters and changes in international trade regimes are alsoconsidered. The four scenarios presented are as follows:• Socio-economic development stalls (Hard times). A protracted recessionunfolds and poor institutional performance maintains high income disparitiesand high levels of poverty. A greater proportion of the subregion’s workforceremains employed in agriculture and weak environment policies meanthat natural resources continue to be unsustainably exploited. Low rates ofeconomic growth, however, relieve pressure on forests for wood productsand for agricultural development. Despite lower rates of forest resourcedegradation, lack of investment and attention to institutional reform meansthat unsustainable practices reappear when more rapid economic growthresumes.• Unsustainable growth (Overburn). Economic growth rates rapidly returnto pre-credit crunch levels and economies are propelled by continuednatural resource exploitation with low investment in human resources andenvironmental sustainability. Employment in industry and services increasesas people leave rural areas to work in towns and cities. Little improvementis seen in implementation of environmental policies and natural resourceexploitation rates remain high as does demand for land. Forestry sectorsaround the subregion contract and economic growth rates are eventuallycurtailed as social and environmental debts become unmanageable.• Sustainable development (Slow and steady). A protracted economicdownturn takes years to lift but development continues at modest ratesthrough reformed economic and social policies. Large proportions of thepopulation remain employed in agriculture but green policies help to promoteenvironmental sustainability while demand for land and natural resourcesEXECUTIVE SUMMARYxi

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportEXECUTIVE SUMMARYremains at a low level. Forest area stabilizes as protection measures increaseand plantations are established with the support of tenure-related reforms.Sustainable forest management (SFM) becomes more widely implementedwith international funding playing a leading role.• High-growth development (Living on the edge). Economic growth continuesat high rates and although policy reforms contribute to improved environmentaland social sustainability, demand outstrips supply and natural resourcescontinue to be degraded. Many jobs are created in industry and services andmovement away from agriculture is widespread. Economic development isseen as the main route to future sustainability but risks of overheating andunbalanced development are ever present. Forests are caught in a pushand pull situation for many years as pressures for both conservation andexploitation are maintained at high levels. By 2020 the outcome is mixed andalthough resources are degraded in many areas, financing for environmentalrehabilitation begins to make restoration of forest resources and their plantand animal communities a reality.The unfolding global economic situation suggests that either the Hard times or Slowand steady scenarios are most likely to develop – the main difference between thetwo being institutional effectiveness. Implementation of forestry-related priorities andstrategies aimed at sustainable development provide a potential bridge between theHard times and Slow and steady scenarios.Although dependent on the level of implementation of policy reforms, forests andforestry in the GMS will have evolved considerably by 2020. The extent and quality offorest resources will have declined, although at slowing rates, and only in remote andinaccessible areas will significant areas of primary forest remain. In some countries,almost all forests will have been degraded by resource extraction. In many countriesprotected areas will provide the mainstay for biodiversity. In lower income forest-richcountries, although pockets of primary forest in protected areas will remain, this maybe mainly due to remoteness rather than enforcement of management plans. Forestswill remain under threat from growing populations moving into more marginal areas,although environmental shocks and increasing incomes may mean that greater effortis put into SFM.In 2020, planted forests will be more widespread in countries where institutionalframeworks are better developed and governance is stronger. Unclear tenure willcontinue to hamper expansion of large-scale plantations in many countries and allocationof land to smaller local units will also mean that economies of scale in supplying woodproducts will not be easily attained. Main centres of forest products production will havemoved outside the subregion, although some countries may maintain their positionswhere competitive advantages can be created. International forestry-related climatechange mechanisms and financing will become more fully functional, and as rural landconversion rates slow and institutional jurisdictions become clearer, greater possibilitywill exist for investing in forestry for climate change mitigation. In the medium term,REDD-funded improvements in forest monitoring could have a pivotal effect on forestryas resource statistics become available in unprecedented detail.Overall, SFM will not be widely practiced in terms of management of natural forestsfor production. Most countries in the subregion will focus on plantations for woodproduction while, at least nominally, placing natural forests under full protection.Complications with sustainable commercial logging will mean that it is only practisedin a few model forests. Wood will continue to be in great demand, as will land, andxii

EXECUTIVE SUMMARYillegal and uncontrolled logging will continue. A more efficient forest sector producingmore and higher quality goods and services from smaller areas will, however, graduallydevelop. Higher productivity plantations, better protected ‘protected areas’ and moreefficient forest products production will contribute to an overall improvement, butwith significant reductions in natural capital.PRIORITIES AND STRATEGIESWithin the Greater Mekong Region’s overall development framework, prevailingeconomic and demographic trends and national-level priorities suggest that forestryrelatedgoals should centre on:» economic production; and» biodiversity protection.Trade-offs between these objectives should be carefully monitored and controlled, andas such a third cross-cutting priority is:» improved governance.Given that economic growth rates in the coming decade are likely to be below thoseof the past decade and assuming that international financing will remain available forimproved forest management, the following strategies to improve the performance offorestry are outlined:Recapitalize forest resourcesTo maintain ecosystem services, reduce carbon emissions, improve watershedprotection and support biodiversity conservation and future economic production,recapitalization of GMS forest resources is essential. Investing in forest resourcerecapitalization can also be seen as a means of generating rural employment andwill be especially attractive if the economic downturn is protracted and returns frominvestments in industry and services fall.With the advent of international mechanisms to finance the environmental servicesassociated with forestry, and greater national awareness of the importance of forestry,the reality of linking environmental conservation and income generation is growing.Even without international financing, several countries in the subregion are beginningto see forest transitions and are demonstrating approaches that could be more widelyimplemented. Mustering the political will, human resources, technical know-how andnecessary financing to effect and expand forest transitions are likely to become thedefining challenge for forestry in the GMS to 2020.EXECUTIVE SUMMARYConserve forest biodiversityProtected areas remain the cornerstone of forest biodiversity and although there areexceptions, deforestation and forest degradation within protected areas are lower thanin surrounding landscapes. In particular, there is a great need to increase forest lawenforcement and awareness-raising efforts and to improve financing for protectedareas – particularly in relation to staffing and management planning. Establishmentof checkpoints, patrols, border controls and other law enforcement interventions canprovide effective support for protected areas, although without high-level politicalbacking, time and effort are likely to be wasted. Several international financingmechanisms are available to fund national parks and should be utilized to the greatestextent possible.xiii

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportUtilize available incentivesHeightened global interest in forests and forestry constitutes the greatest opportunityin recent times for the forestry sector to deliver on society’s priorities. Financialmechanisms aimed at reducing deforestation and degradation of forests, and legalityrelatedregulations aimed at imports of forest products to high paying markets providenew incentives to promote SFM.Marketing of forests and forestry as producers of valuable timber, carbon sinks,conservation values, watershed protection and rural employment could bring manydirect and peripheral benefits that are not being realized through current marketingsystems. Given the opportunities that now exist, funnelling start-up investment intoaccessing and acquiring additional financing would seem appropriate.EXECUTIVE SUMMARYInvolve stakeholdersThe challenges that face forestry – with respect to climate change and otherwise –and the difficulty of implementing more complex forest policy through a regulatoryapproach suggest that much greater inclusion of forestry stakeholders at different levelsis necessary. Public opinion should play a larger role in forestry development so thatpolicies are appropriate, are broadly supported and can be more easily implementedin a rapidly changing region. Improving transparency, consultation and inclusiveness isalso likely to promote greater ownership and support enforcement efforts.Reinvent forestry institutionsOver past decades, forest and forestry policies have been formulated to encompass theprinciples of SFM in almost all countries in the subregion. Implementation has, however,been lacking in all but a few. Recognition of this deficiency and refocusing of institutionsto play an appropriate role in effectively and efficiently meeting policy goals is essentialto move the subregion’s forestry sector in parallel with wider developments. Gradualshifts towards local participation, greater stakeholder involvement and expandingindividual and household ownership of forests also mean that many more factors willplay deciding roles in forestry by 2020. This is likely to drive government institutions toadopt facilitative and regulatory, rather than direct management, roles. Through thischange, it is important that institutions engender responsiveness and flexibility. Rapidresponses to threats and opportunities and ability to redesign and realign objectivesconfer distinct advantages in maintaining forestry agencies and their contribution tosociety.Revitalize field-level forestryMany of the day-to-day field-level activities that physically determine the future of forestsand forestry are often overlooked in national and international discussions. Withoutfocus on practical aspects of forestry, implementation of any policy objectives will beundermined. For example, increased opening and drying of the subregion’s forests,changing weather patterns and greater risk of anthropogenic ignition as habitationand accessibility increase mean there is a strong need to improve fire management toavoid large losses of forest and associated values. Other areas of importance includeimproved forest harvesting, planted forest establishment, forest rehabilitation andassessment of forest health and vitality.xiv

EXECUTIVE SUMMARYImprove educationThe long time scales over which national-level changes occur strongly suggest thateducation in relation to the values of forests and the opportunities and challenges facedshould be a key focus in the GMS. Without an ‘environmentally smarter’ next generationof consumers and decision-makers, it is likely that resources will be irretrievably erodedthrough population pressure and environmentally sustainable practices will not takeoff. More immediately, the current lack of human resource capacity in forestry andincreasing complexity of forest management, including linkages with climate changeespecially, imply that high quality education and training should be made available tothose working in forestry and related disciplines at local, provincial and national levels.EXECUTIVE SUMMARYxv

INTRODUCTION1INTRODUCTIONThe GreaterMekong Subregionis growing rapidlywhile demands arediversifyingChange is normalityand the futureremains uncertainGlobal issues areconfronting societyand trade-offs arebeing struckThe Greater Mekong Subregion 1 has experienced an almostcontinuous rise in fortunes over the past ten years. Populationshave become larger and wealthier and demand for land andresources has increased. Emerging from the Asian economiccrisis, China has become a global engine of economic growthand key export destination. Levels of economic developmenthave increased in all countries while improved institutionalperformance is being more widely demanded as the primarymeans to sustain and broaden achievements made to date.The breaking Asian economic crisis on the eve of publication ofthe first Asia-Pacific Forestry Sector Outlook Study in 1998 resultedin substantial and lasting adjustments to national economies andto the forestry sector. The 2008/2009 global economic slowdownhas signalled another round of dramatic change: capital flightand reductions in foreign investment have again struck thesubregion while export markets have also contracted. Theimpacts of the slowdown have yet to unfurl in their entirety butsigns are that Asian markets will become much more importantexport destinations in the future. In association, the world isset to become increasingly dependent on a widening range ofinteracting powers in a multipolar world in which diverse interestspursue divergent aims (NIC 2008).Again at the international level, climate change has topped theagenda while high oil prices prior to the 2008 downturn gave riseto the spectre of an uncertain global energy future. In the GMS,transformations in economies, from subsistence-based to exportledto consumer-driven, have placed rapidly changing and oftenconflicting demands on forests. Trade-offs between economicdevelopment and environmental protection are ever moreacutely experienced and seemingly unstoppable clearance anddegradation of natural forests has questioned the effectiveness ofefforts to promote SFM.1 Cambodia, the People’s Republic of China (Yunnan Province and Guangxi ZhuangAutonomous Region), Lao People’s Democratic Republic, Myanmar, Thailand, and Viet Nam.1

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportForest resourcesare diminishingin the face of highdemand for food,fuel and fibreClimate change,and responses toclimate change, willincreasingly affectforestryChanging demandsfor land, resourcesand environmentalservices will affectforestsEconomicliberalization hasnot led to improvedgovernanceThe roles of forestsare diverse andtheir continuedexistence is in ourhandsWith the passing of the era of ‘peak timber’ in the subregion anddemands for food, fuel and fibre increasing, a lack of financial andinstitutional support for SFM is jeopardizing the future of naturalforests and biodiversity. The legacy of high-impact logging hasalso undermined the future of SFM by reducing the present valueof forest resources, while harvest reductions may increasinglyturn attention towards plantation-grown wood and woodproducts imports. As such, depletion of natural forest resourcesis an increasing concern for the forest products industry andtrade measures implemented in high-paying markets are nowbeing seen as a new direction from which support for legal andsustainable timber production can be derived.Excessive timber exploitation, associated forest drying and thefrequent use of fire as a management tool threaten to act in concertwith climate change to precipitate widespread degradation offorest ecosystems. Predicted increases in storm intensity andgreater frequency of extreme meteorological events may also raisethe incidence of environmental disasters such as floods, droughtsand landslides. At the same time, global responses to climatechange – both in relation to mitigation and adaptation – are setto have much more influence on forestry. REDD in particular holdsgreat promise where institutional mechanisms can be establishedto effectively alter patterns of behaviour, monitor changes andprovide equitable rewards.Growing demands for land and natural resources are, however,introducing doubt that pressure on forests and forest land can besignificantly reduced. Between 2010 and 2020, the population ofthe GMS is projected to increase by 10 percent to 249 million. Withconcomitant expansion in demand for environmental servicesfrom forests, both from domestic and international sources,the next decade will provide a test of the subregion’s ability tointegrate diverse causes in innovative ways.Increased international focus on the quality of governanceis bringing an additional dimension to forestry and nationaldevelopment. Governance improvements will be of keyimportance but have to date remained elusive in much of theGMS. Economic liberalization without parallel increases ininstitutional capacity is raising concern for sustainability – notonly in environmental terms but socially and economically aswell. A singular reliance on growth to reduce poverty and boostsocio-economic performance may prove costly in terms of lossof environmental services, and future economic performance,where institutional leadership does not emerge.The many roles of forests – in providing timber and woodproducts, protecting biodiversity, providing food during timesof scarcity, ameliorating local and global climate, reducing theimpacts of natural disasters, providing a location and backdropfor ecotourism and a source of employment for rural dwellers – areamong the areas discussed in the following sections. The extent2

INTRODUCTIONof forests and the benefits they provide in 2020 will result fromdecisions taken in relation to these multiple roles in the comingmonths and years.1.1. BACKGROUNDThe initial Asia-Pacific Forestry Sector Outlook Study (APFSOS I) drew together the manydimensions of forestry to provide a coherent description and analysis of the situation andprospects for forestry in the region. The study resulted in 50 working papers on a varietyof forestry themes. The formal aspects of the study culminated in a comprehensivemain report, published in November 1998. APFSOS I provided an important roadmapfor forestry sector development in the Asia-Pacific region to 2010, which is still beingused to guide policy-makers in the region today. Much of APFSOS I is now becomingoutdated and, since 1998, a number of fundamental changes have taken place withinand outside the forestry sector.Asia-Pacific Forestry Towards 2020 (APFSOS II), aims to update and expand the workcompleted in 1998 and focuses on existing and emerging issues of importance toforestry in the region. The objectives of this study are to:• Improve understanding of the forces that shape forests and the forestry sectorin the GMS and of trade-offs that have been and will be made in implementingpolicy and actions that affect forestry.• Identify policy options at the national and subregional levels to improve thelong-term flow of benefits from forestry and maximize flexibility in view of futureuncertainty.Specifically, the report seeks to identify existing and emerging trends in forests andforestry and link them to broader changes in society and in specific key drivers ofchange. Through scenario analysis, sketches of possible forestry futures are developedand recommendations are made to steer the sector towards more desirable outcomes.1.2. SCOPE AND AUDIENCEFive countries are included in this study: Cambodia, Lao People’s Democratic Republic,Myanmar, Thailand, and Viet Nam. The two provinces in the People’s Republic of Chinathat form an additional section of the GMS (Yunnan Province and Guangxi ZhuangAutonomous Region) are not included. The report draws on papers produced as part ofAPFSOS II by each of the five listed countries.The study is based on the perception that forestry is a long-term, broadly-based activity,covering economic, environmental and social values at a range of levels – from local toglobal – and is influenced by a wide range of pressures both from within and outside theforestry sector. Within the report, past trends and influences on forestry are reviewed tobuild a frame of reference upon which future scenarios are constructed. In developing apicture of the likely future situation in forestry, recommendations and policy measuresare drawn to guide the sector towards the more desirable outcomes.This paper is aimed at policy-makers in the GMS and people who influence them, atproject developers, aid agencies and donors, at members of international forums anddiscussion groups and at investors in the GMS whose actions may impact upon forests3

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportand forestry. It is also aimed at those interested in environmental and social issues in theGMS and whose influence may be indirect or manifested in the future.1.3. STRUCTURE OF THE REPORTThe report is split into five parts describing forests and forestry in the subregion, theinfluences that affect them and, given these influences, the scenarios that may play outby the year 2020. The final sections outline what we may see in 2020 and possible waysto improve the situation.Current status of forests and forestry in Southeast AsiaPresents the status and trends in forest resources and their management, wood and forestproducts, wood energy, non-wood forest products, service functions of forests, politicaland institutional frameworks.What will influence the future state of forests and forestry?Discusses changes in society that will have impacts on forests and forestry, such asdemographic changes, changes in the economy and the political and institutionalenvironment, the effects of infrastructure development and agricultural expansion.Probable scenarios and their implicationDiscusses the probable scenarios for socio-economic development and forestrytowards 2020.Forests and forestry in 2020Provides a description of the probable state of forests and forestry in Southeast Asiain 2020, including forest resources, wood and forest products, forest services andforest policies and institutions.Bringing about changeDiscusses possible responses to the range of scenarios that are foreseen and tothe most likely situation in terms of policy and institutions, technology, investment andregional and global collaboration.4

2STATUSSTATUS AND TRENDS IN FORESTS AND FORESTRYAND TRENDS INFORESTS AND FORESTRYThe role of forestryis changingForests andtheir constituentbiodiversity isbeing lostThe Greater Mekong Subregion’s forests have played a centralrole in the development of the region and continue to play animportant role in the production of wood and other products, theconservation of global biodiversity, climate change abatementand protection of land and water resources. Forests also providea home to a diminishing but significant number of people inthe subregion and offer employment in, among other things,production of furniture and other wood products, protected areamanagement and plantation development. Changes in the stateof forests and forestry have widespread impacts, the costs andbenefits of which are spread across society – from the local to theglobal scale and from now into the future. This chapter outlinesand discusses the most important issues confronting the GMSforest sector and provides an overall indication of broad trends inrecent decades.The forests of the GMS qualify as some of the most species rich inthe world (Figure 2.1). The subregion covers an area identifiedas the Indo Burma biodiversity hotspot – one of the world’s 25global biodiversity hotspots 1 in which a significant proportionof the world’s species are under significant threat (Myers et al.2000). Forest clearance in the subregion has remained relativelyconstant over past decades. Between 2000 and 2010 the area offorest declined at 0.4 percent per annum, compared to 0.5 percentper annum between 1990 and 2000. Between 1990 and 2010 theforest area contracted by 8.0 million hectares (FAO 2010).1 See http://www.biodiversityhotspots.org/Pages/default.aspx. Conservation Internationalnow defines 34 global biodiversity hotspots as regions containing at least 1,500 species ofendemic vascular plants (> 0.5 percent of the world’s total), and having lost at least 70 percent ofits original habitat.5

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportF igure 2.1. Forest cover in Southeast Asia 2005Source: FAODeforestation andassociated carbonemissions pose aserious problemForest productproduction is fallingForest managementis advancing slowlyIPCC (2007a) estimated that during the 1990s, 17.4 percentof greenhouse gas emissions arose from forestry (mostlydeforestation). Forests have thus become an important focusof global climate change abatement efforts – particularly peatswamp forests where carbon emissions following deforestationand drainage contribute significantly to the global total (Uryuet al. 2008). ‘Reduced Emissions from Deforestation and forestDegradation’ (REDD) readiness activities, i.e., preparations forpotential post-2012 inclusion of REDD in global climate changeagreements, are already taking place in several countries in thesubregion.Within the subregion forest production centres have moved fromThailand and Viet Nam on to Lao PDR, Cambodia and Myanmaras economic frontiers have advanced and existing resourceshave been exploited. With timber supplies now falling in theremaining resource-rich countries, resources farther afield arenow increasingly supplying forest products manufacturingcentres inside and outside the subregion.The values of forests are best realised through different ownershipand institutional structures depending on the type of forest andnature of demands placed on them. In several countries in the6

STATUS AND TRENDS IN FORESTS AND FORESTRY2GMS,allocation of forests to non-state actors is expanding assupply-demand balances change and needs for greater tenure,regulatory and technical efficiency become apparent. Needs forincreased investment and greater social and economic justiceare also promoting this change. At the same time, institutionsare adapting to accommodate the different roles of forests inproduction, protection and conservation, while in some casesbeginning to separate regulatory and management roles.2.1 T RENDS IN FOREST RESOURCESDemands on forestsare risingForest productproduction haspeaked and focusis turning towardsplantationsExpanding road networks, rising demand for forest productsand increased cross-border movement of goods, capital andlabour are reducing the importance of national boundaries indetermining trends in GMS forest resources. Growing demand forforest products will place increasing pressure on the subregion’sforest resources as populations expand and become wealthier.Heightened recognition of the non-extractive values of forestsas populations become more urbanized and internationalconventions and agreements are strengthened will increasinglyconfront society with the challenge of balancing demands forforest goods and forest services.The subregion’s period of “peak timber” has passed andcultivation of other crops has proved more workable and moreprofitable than sustainable management of large areas of naturalforest. To maintain production of forest products, efforts havebeen made to expand forest plantations. In general, the extent towhich plantation establishment programmes have been pursuedrelates to the degree to which natural forest resources have beendepleted (Katsigiris et al. 2004)The following sections outline changes in the status of forest resources in the GMS.Particular attention is paid to the productive functions of forests and additional sectionsoutline patterns in forest ownership, management and the economic viability of forestmanagement for wood production. Trends and issues associated with conservation offorests are included in Section 2.4.1.2.1.1 Changes in forest coverForest cover losshas slowed sincethe 1990sGMS forests (excl. China) cover 90.4 m ha, equivalent to 48 percentof the land area, with national forest cover ranging from 37percent in Thailand to 68 percent in Lao PDR. Myanmar also hasa significant areas of other wooded land. 2 The overall rate of lossof forest area has been relatively constant since 1990 and stood at0.4% per annum between 2005 and 2010 as shown in Table 2.1.2 Land not classified as forest but with area > 0.5 ha and height > 5m and 5-10% canopycover7

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportTa ble 2.1. Area of forest and other wooded land in the GMS in 2010 and rate ofchange in forest areaForest area2010(000 ha)Forestcover(%)Annual change in forest area(%)1990-20002000-20052005-2010Area of otherwooded land2010(000 ha)Cambodia 10 094 57 -1.1 -1.5 -1.2 133Lao PDR 15 751 68 -0.5 -0.5 -0.5 4 834Myanmar 31 773 48 -1.2 -0.9 -0.9 20 113Thailand 18 972 37 -0.3 -0.1 0.1 0Viet Nam 13 797 42 2.3 2.2 1.1 1 124GMS 90 387 48 -0.5 -0.3 -0.4 26 204Source: FAO (2010).Forest cover isincreasing in somecountriesFigure 2.2 shows the distribution of forest areas betweencountries and the predominance of Myanmar, both in terms ofabsolute forest area and reduction in area. Except for Viet Nam,all countries in the region show the same decline in forest area.Fig ure 2.2. Forest area in GMS countries, 1990-2010Source: FAO (2010).Over four percentof the land area inthe GMS has beendeforested since1990A total area of 8 million hectares of forest is estimated to havebeen lost in the GMS between 1990 and 2010 – equivalent to4.2 percent of the land area. Losses were proportionally highestin Cambodia (685 000 hectares/year) and Myanmar (310 000hectares/year). Viet Nam reported an increase in forest area,amounting to around 144 000 hectares/year, while Thailand alsoreported a modest increase of 15 000 hectares/year (FAO 2010).8

STATUS AND TRENDS IN FORESTS AND FORESTRYThe qualitativevalues of forestsare of centralimportanceAlthough the overall rate of change in forest cover is useful as aheadline guide, the global definition of forests as areas with aslittle as 10 percent canopy cover fails to capture more qualitativeforest values. Forest degradation, for example, may take placewithout reflection of forest cover statistics, as outlined in Box 2.1.Similarly, forest types must be taken into account in assessingstatus and trends in forests, forestry and associated goods andservices.Box 2. 1. Understanding forest resource statisticsAs a basis for sound planning in the forestry sector, forest resource and forestproduct statistics in the GMS still require significant improvement. Problems resultfrom a range of issues both technical- and management-related and include thefollowing:• Forest quantity, type and quality vary greatly across locations such that highintensity surveys are necessary to collect accurate information – remotesensing simplifies matters but expensive ground truthing is still required.• Many countries do not have the financial and human resources requiredto collect forestry data and countries where forests are most abundant areoften the poorest.• There is often poor coordination between institutions with an interest in theforestry sector (e.g., the military, village groups, forestry agencies, concessionholders) and the benefit of information collection may be insufficient forany one party to justify collection.• Forest product figures may be underdeclared or unavailable and forestrelatedinformation may not be collected where corruption and illegal oruncontrolled logging are prevalent.• Information may be proprietary in nature – especially in relation toplantations.• Measurement conventions and conversion factors create difficulties incomparing statistics across regions and over time.• Forests are heterogeneous and have multiple users with differentinformation requirements and forest resource definitions are therefore ofgreat importance, for example:» areas of different forest types, (e.g. plantation forest, primary forest oragroforestry), and different species groups, (e.g. bamboo forest, rubber,coconut or oil-palm plantation), may be aggregated to give a figure oflimited use in relation to the different values of forest;» inclusion of potential forests and areas designated as forest but with notrees, may similarly cause accounting problems in relation to forest values;» low forest cover resolution may result in ‘hidden deforestation’ (seediagram below).Problems remain with forest degradation going unseen, however, especially asdegradation is difficult to identify in coarse grain satellite images usually used inforest cover assessments (Stibig and Malingreau 2003). International forest cover9

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportdefinitions also fail to capture changes in forest resources until forests are veryhighly degraded.Representations of 70, 40, 20 and 10 percent canopy cover – all constitute‘forest’ under the FAO definitionPlanted forests areincreasing whileprimary forestsshrinkAs natural forests have been logged and cleared in the subregionefforts have been put into planting forests. In most countries theproportion of planted forest 3 remains low, however, and only inThailand and Viet Nam do they make up a significant proportionof the total forest area (Table 2.2). Most countries also report onlysmall remaining areas of primary forest, with the exception ofThailand.Tabl e 2.2. Natural and planted forest area in Southeast Asia in 2010 (000 ha)TotalforestPrimaryforest% PrimaryOthernaturallyregeneratedPlanted%PlantedCambodia 10 094 322 3.2 9 703 69 0.7Lao PDR 15 751 1 490 9.5 14 037 224 1.4Myanmar 31 773 3 192 10.0 27 593 988 3.1Thailand 18 972 6 726 35.5 8 261 3 986 21.0Viet Nam 13 797 80 0.6 10 205 3 512 25.5GMS 90 387 11 810 13.1 69 799 8 779 9.7Source: FAO (2010).Planted forests areexpanding – in VietNam and Thailandin particularGreat variation in the area of planted forests and rates ofestablishment are evident across the GMS as Figure 2.3 shows.The overall rate of planted forest establishment in the subregionincreased from 270 000 hectares per annum between 2000 and2005 to 279 000 hectares per annum between 2005 and 2010.Rates in the 1990s, by comparison, averaged 194 000 hectares perannum. Viet Nam has the highest proportion of land area underplanted forests (11 percent) and also the highest rate of expansionat 144 000 hectares per annum between 2005 and 2010. In Thailandrates are also high at 108 000 hectares per annum. Within the3 Planted forests constitute plantations and the planted component of semi-natural forests.10

STATUS AND TRENDS IN FORESTS AND FORESTRYAsia-Pacific region as a whole, 80 percent of the expansion inplanted forest between 2005 and 2010 took place in China whereestablishment averaged 2 million hectares per annum. Furtheranalysis of productive plantations is provided in Section 2.1.2.Figure 2.3. Extent of planted forests in GMS countries, 1990-2010Source: FAO (2010).How productionand protection areintegrated lies atthe heart of forestmanagementProtection andconservationroles of forestsare increasinglyrecognizedAlthough all forests perform a range of functions, protection offorests, either for conservation of biodiversity or for provisionof other environmental services, often means that productionis excluded. Despite increasing demand for forest products inthe GMS, conservation and protection of forests have becomeprimary motivating factors in forest management in severalcountries. Implementing a switch towards forest protection hasoften been associated with complications at the field level – forexample, forest product supply reductions; ‘export’ of loggingto neighbouring countries; denial of local rights of access toresources; and illegal logging proliferation due to the lack ofvested interest in forest conservation. Effectively managingthese and associated transitions lies at the heart of SFM and willdefine trends in forest resources in the coming years.The FAO forest resources assessment divides forest area into thefollowing designations: production, protection, conservation ormultiple use (FAO 2010). Forest can also be designated for socialservices, other uses or have no designation. Figure 2.4 shows thepredominance of production as the primary function of forestsin the GMS, accounting for 40 percent of the forest area in 2010.The proportion has fallen from 42 percent in 2000 after risingfrom 18 percent in 1990. The proportion of forest designated forprotection also remained constant between 2000 and 2010 at19-20 percent, while the proportion of conservation forest rose11

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportfrom 19 to 22 percent. Forest designated for other functions 4remained stable at around 19 percent of the total forest areahaving dropped from 53 percent in 1990.Figure 2.4. Extent of forest area by designation in Southeast Asian countries in 2010Source: FAO (2010).The area ofconservation forestin the GMS hasincreased by 20percent since 1990Protection forestsaccount for nineteenpercent of the totalforest area in theGMSConservation forests serve primarily to protect biodiversity andalthough a strong connection therefore exists with primaryforests, the value of secondary forests in biodiversity conservationhas also been discussed amid some controversy (Wright andMuller-Landau 2006; Butler 2007). The area of conservation foresthas increased significantly since widespread establishment ofprotected areas following the 1992 Earth Summit in Rio. Between1990 and 2010, the area of forest designated for conservation inthe GMS increased by 50 percent or 6.7 million hectares to reach20.1 million hectares – 11 percent of the total land area and 22percent of the forest area (see Figure 2.17). The largest increasesbetween 2000 and 2010 were recorded in Myanmar followed byCambodia and Viet Nam. Further analysis is provided in Section2.4.1.Forests designated primarily for protection cover 17.4 millionhectares in the GMS and account for 9 percent of the land areaand 19 percent of the total forest area (FAO 2010). Protectivefunctions include climate amelioration, protection fromerosion and protecting coastlines and water resources. Acrossthe subregion, protection forests account for widely differingproportions of the total forest area from 4 percent in Myanmarto 58 percent in Lao PDR, although a national protection forestarea system has yet to be established in Lao PDR. Between 2000and 2010 the area of protection forest in the subregion fell by 1.0million hectares.4 Multiple use, social services, other use or no/unknown designation.12

STATUS AND TRENDS IN FORESTS AND FORESTRYForest cover change hotspotsHotspots of forestconversion appearwidely across thesubregionUpland and lowlandforests and forests inborder areas are allaffectedA review of forest cover change hotspots in Southeast Asia hashighlighted the continuing loss of forest resources in manylocations around the subregion. Major hotspots of forestconversion and loss of canopy cover were identified in Myanmar,with many smaller patches also appearing in Lao PDR, Viet Nam,Cambodia and in remaining mountain forests in the Philippines(Stibig et al. 2007). Large areas of small and scattered change werealso identified in the north of Thailand where encroachment intoprotected areas and paring back of forest edges are prevalent(Stibig et al. 2007; Lakanavichian 2006).In Lao PDR, Viet Nam, Myanmar and Cambodia most areas offorest loss are in the hilly zones and along the mountain rangeswhere evergreen and semi-evergreen forests are located.Changes to both evergreen and deciduous lowland forestshave also been recorded in the flatlands of Cambodia, centralMyanmar, central and southern Lao PDR and central Viet Nam.Additionally, forest change hotspots are frequently located inborder areas such as between Myanmar and Yunnan, betweenLao PDR, Cambodia and Viet Nam and between Thailand andCambodia (Stibig et al. 2007). In Thailand, the 1989 logging banhad little initial effect on deforestation although other factorsare playing important roles in forest cover change (Box 2.2).Box 2.2. Forest cover change and the logging ban in ThailandDespite the 1989 logging ban in Thailand, there was, at least initially, little effecton the rate of deforestation. The average forest loss in the seven years followingthe ban was almost 2 000 km 2 annually, which was comparable with forest lossduring the seven years preceding the ban (Ongprasert 2009). Currently, reductionin forest area mainly results from:• Forest clearance for agriculture and other land-uses;• Intensified shifting cultivation; and• Wood poaching.Many areas around Thailand where shifting cultivation has been eradicated are,however, returning to forest, although official statistics do not reflect the changesunless there is an associated increase in forest land area. Plantations on privateland are also expanding but are not included in official statistics as no detailedinventory of the existing plantation area has been carried out (RFD/DNP 2009).13

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportMangrove forestshave been hitdisproportionatelyhardAcross the subregion, mangroves have been particularlysusceptible to conversion and degradation owing to the highvalue of the land they occupy, easy accessibility and the value ofwood from mangrove species for energy production. In the GMS,the area of mangroves is reported to have fallen from 868 000to 830 000 hectares between 2000 and 2010, representing anannual loss of -0.45 percent - marginally higher than the overallrate of forest loss (see Table 2.1).2.1.2. Changes in growing stockGrowing stockrelates closely totimber availabilityand carbon storageOnly Viet Namhas significantlyincreasing growingstockGrowing stock is an important indicator of forest health and vitalityand also of wood availability and carbon storage. Forests vary inproductivity and density according to climate, soils, topographyand species composition and level of degradation. By comparingchanges over time or between similar forest types, estimates offorest degradation can be derived. Such information is of risingimportance in light of increasing global commitment to reducingemissions from forests and in relation to biodiversity conservation.Across the subregion changes in growing stock since 1990 closelyreflect changes in the extent of forest resources (Figure 2.5). Onlyin Viet Nam has growing stock increased significantly, althoughmarginal increases were also reported for Thailand.Figure 2.5. Growing stock in GMS countries, 1990-2010Source: FAO (2010).Growing stockdata suggest forestdegradation ratesincreased after2005Growing stock per unit forest area varies greatly between countries,although reasons for the differences are not entirely clear (Table2.3). Natural stocking densities and levels of forest degradationprobably play a part, although figures should be used withcaution as other factors, including poor information availability,14

STATUS AND TRENDS IN FORESTS AND FORESTRYare probably important. Changes in growing stock per unit forestarea suggest that at the subregional level forest degradationaccelerated after 2005 (Table 2.3). None of the countries in theGMS reported increases in stocking density.Table 2.3. Growing stock and change in growing stock per unit forest areaGrowing stock(m 3 /ha)Change in growing stock (m 3 /ha/yr)2010 2000-2005 2005-2010Cambodia 95 -0.11 -0.10Lao PDR 59 0.00 -0.06Myanmar 45 0.00 0.00Thailand 41 0.00 0.00Viet Nam 63 -0.47 -0.46GMS 55 -0.08 -0.10Source: FAO (2010).Growing stockdata will becomeincreasinglyimportantDespite the limitations detailed here, growing stock figures are setto become increasingly important in national carbon accountingefforts related to potential post-2012 agreement on inclusion ofREDD. More accurate figures are thus likely to become availablein the near future. For this reason and others, implementation of apotential agreement on REDD will have repercussions throughoutforestry and not just in relation to carbon as outlined in Section2.4.2.2.1.3. Status and trends in production forestsThe area ofproduction forestshas increased in theGMSThe extent of forest designated for production in the GMSincreased by 18.3 million hectares between 1990 and 2010(Figure 2.6). This contrasts with the perception that a widespreadtransition in forest management from production to protectionis underway. In Myanmar in particular, 20 million hectares offorests were reclassified for production and an accompanyingincrease in industrial roundwood production was reported (FAO2009). Between 2000 and 2010, subregional trends have beenmixed. The overall area of production forests fell by 5.4 millionhectares, although in Lao PDR, the Philippines, Thailand and VietNam increases were recorded – probably in relation to expansionof planted forests.15

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportFigure 2.6. Extent of forest designated for production in GMS countries, 1990-2010Source: FAO (2010).Forest productssupply has followedtrends in forestclearanceRecent and historic trends in forest product manufacturingin the GMS indicate a close correlation with forest clearance.Reduction in supplies of timber and other products fromnatural forests and poor plantation performance in the face ofincreasing demand will have inevitable repercussions in thesubregion. Increased pressure on conserved, protected andother forests, both domestically and abroad, has been reportedas a result of logging bans in Thailand and more recently in China(Lakanavichian 2006; Katsigiris et al. 2004; Brown et al. 2001).Further contractions in supply are likely to have similar impactsunless alternative sustainable sources of forest products can beestablished or found.Productive plantationsThe area ofproductiveplantations isexpandingGlobally, plantations are becoming increasingly important insupplying forest products as the extent and stocking of naturalforests is reduced and protection measures proliferate. In 1999,it was estimated that although constituting only 3 percent of theglobal forest area, productive plantations produced 35 percentof the global wood supply (ABARE and Jaakko Pöyry 1999). Theproportion of wood from plantations is expected to increase incoming years. The total area of productive plantations in the GMSwas estimated at 4.8 m ha in 2005, equivalent to 5.5 percent of thetotal forest area in the GMS (FAO 2005a). Thailand and, in recentyears, Viet Nam have dominated plantation production in thesubregion, together accounting for 80 percent of the total areain 2005. In Viet Nam the area of productive plantations increasedsteeply, reaching 1.8m ha in 2005, and increases were also reportedin Lao PDR and Myanmar (Figure 2.7).16

STATUS AND TRENDS IN FORESTS AND FORESTRYPulpwood andrubber plantationsare expandingfastestIn the GMS, plantations are established primarily for production ofsawlogs, pulpwood, bioenergy and rubber production. The main‘traditional’ forestry species planted are Acacia mangium, Tectonagrandis and Eucalyptus spp. A. mangium is the main species grownfor timber, panel products and pulp and paper, closely followedin area by teak, which is grown primarily in Indonesia, Myanmarand Thailand (FAO 2006a). The proportion planted for pulpwoodproduction has climbed significantly in recent years and in VietNam pulpwood plantations expanded from a negligible area in1990 to over 1 million hectares each in 2005 (FAO 2006a). Rubber 5is a particularly important crop in the subregion and in Thailandcomprised 63 percent of the total area of productive plantationsin 2005 (Charuppat 2005; FAO 2005a). In Viet Nam, the area ofrubber doubled between 1990 and 2005 and in northern LaoPDR considerable investment has gone into rubber plantationestablishment in recent years (Khanh 2005; Alton, Bluhm andSananikone 2005).Figure 2.7. Extent of productive forest plantations in GMS countries, 1990-2005Source: FAO (2005a)Longstandingimpedimentsto plantationestablishment arebeing overcomein ThailandThailand’s plantations are dominated by rubber, with teak beingthe second most important species (Enters et al. 2004). Plantationestablishment rates in Thailand have been very low and totalreforestation over the past 100 years amounted to just over 1 millionhectares, while between 1961 and 2004 almost 11 million hectaresof natural forest were cleared (Lakanavichian 2006). Followingthe 1989 natural forest logging ban, which also covered moststate-owned plantations, plantation development encounteredseveral barriers: local resistance to plantation establishment in5 As a result of increasing use of rubberwood as sawntimber, rubber plantations now qualifyas forest under FAO definitions (FAO 2006a). Some countries do not, however, include rubberin their official submissions to FAO. For example, although 3.2 million hectares of rubber wereharvested in Indonesia in 2007, rubber plantations were not included in FRA 2005 statistics(FAO 2005a).17

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportdegraded forest reserves; resistance to monocultural plantations;onerous harvest and transportation procedures; and reluctance offarmers to make longer term investments (Lakanavichian 2006).More recently, however, expansions of investments in paper andpulp production in Thailand suggest that constraints have largelybeen overcome. Dependence on private plantations, confiscatedlogs and the limited areas of state plantation that are harvested,however, remains high and imports of logs and sawnwood are likelyto continue. Box 2.3 details the response to increased dependenceon wood product imports in Thailand.Box 2.3. Thailand’s response to dependence on wood product importsAfter the logging ban in 1989, domestic supplies of hardwood fell below domesticdemand in Thailand. In 2007, 1 933 286 m 3 of logs and sawnwood were importedto satisfy demand. Major imports came from Malaysia, Lao PDR and Myanmar.Thailand also exported 1 739 933 m 3 of logs and sawnwood – mainly to China andMalaysia.The Royal Forest Department (RFD) responded to increasing import levels byestablishing the Master Plan for Economically Viable Tree Planting in 2006. Theten-year plan to promote reforestation is being jointly implemented by the RFD,the Economic Tree Organization and the private sector. The plan aims to increaseplantation production but is also a response to planned reductions in governmentreforestation and transfer of responsibilities to the private sector. It is expectedthat the government will have to provide a budget of close to US$5 billion over tenyears with a target of planting 2.4 million hectares.Source: Ongprasert (2009).Allocation ofland to familiesand householdsis influencingplantationdevelopmentPlantation development in the GMS has been variouslyconstrained by lack of investment, competition for land from cashcrops, conflicting land claims, insufficient technical expertise,unnecessary government intrusion and poor regulatoryenvironments, especially with respect to tenure and policystability. Allocation of land to families, individuals and otherprivate entities is, however, weakening the grip of governmentsover forest resources in several countries around the subregion.With the addition of private sector technical expertise andinvestment, plantation establishment in the subregion may beset for a brighter future. For plantation development to flourish arange of needs must be met and frameworks must be available toallow different actors to play effective roles.18

STATUS AND TRENDS IN FORESTS AND FORESTRYEfforts arebeing made tofurther stimulateplantationproductionThe comparative success of rubber and oil-palm plantationsin the subregion suggests that low profitability of wood/timber plantations is a key factor constraining expansion.Analysis conducted in Malaysia suggests that ratesof return are considerably higher for rubber and oilpalmthan for other plantation species (Adnan 2009.Lower margins and competition from countries with moreefficient systems of production and from natural forests all weighagainst profitability of plantation-produced wood. Unlike rubberand oil-palm, wood can also be produced at a much wider rangeof latitudes, which considerably increases competition. Efforts are,however, being made to increase rates of plantation developmentto meet growing demands and reduce future wood importation.Increased private sector and individual/family involvement hasbeen seen as a way to increase production in recent years asstate forestry budgets have fallen. Regulations have also beenamended and confidence has grown in the private sector beingable to outperform frequently failing state programmes. Thesituation in Viet Nam and Lao PDR is detailed in Box 2.4.Box 2.4. Plantation development in Lao PDR and Viet Nam: struggling to meetdemandLao PDR and Viet Nam are at different stages of forestry development and differwidely in terms of population pressure, labour availability, demand for land andresources and access to international markets. Natural forest cover is still high inLao PDR, whereas in Viet Nam natural forests have been cleared to a much greaterextent. Supported by low cost labour in Viet Nam and better access to internationalmarkets, the supply-demand situation has resulted in large flows of timber fromLao PDR to supply the export-oriented wood products manufacturing industry(Barney 2005; EIA/Telapak 2008). While natural forests are becoming increasinglydepleted, plantation development in both countries has encountered technicaland institutional constraints, resolution of which could reduce pressure on naturalforest resources through product replacement and reduction of demand on forestland.In Lao PDR, plantation expansion was relatively measured until rapid increases inforeign investment in rubber and pulpwood plantations after 2000 (Tong 2009).Prior to the 2008/2009 economic downturn, demand for land for plantationestablishment grew beyond government capacity to administer requests andregulate activities. Granting of new concessions was therefore suspended to allowreview of existing concessions and assessment of the approval process. In spiteof enthusiasm for concessions, smallholder plantation production of pulp andsawlogs has been constrained due to: lack of tree-growing expertise; poor species/provenance selection; and limited understanding of and access to markets. Foreigninvestment and growing experience are likely to improve the situation but there isstill a need for clear laws and regulations to facilitate investment and for effectivemechanisms to be developed to resolve land tenure disputes.19

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportIn Viet Nam, the Five Million Hectare Reforestation Programme was launched in1998 to reduce dependence on forest product imports and protect land resources.By 2005, 683 000 hectares of industrial roundwood plantations had beenestablished, although production forest establishment reached only a quarter ofthe 2010 target (FSIV 2009). Problems included:• Lack of investment due to long rotation lengths and perceptions that profitsare low and risky in comparison with production of agricultural crops.• Plantations have also been established mostly in poorly developedmountainous areas where competition with products from natural forests isgreater.• Allocation of forest land to families, individuals and other economic entities(see Box 2.17) has reduced efficiencies of scale and investors must negotiatewith many parties.• Allocation of forest land to smaller entities has resulted in a lack of uniformityin products and uneven supply.• Smallholders’ preferences for quick returns have reduced rotation lengths andthe proportion of sawlogs, as opposed to pulp logs, produced is thereforefalling.Plantation productivity is also a major problem in Viet Nam and although growthrates have improved in recent years, plantation quality and yields remain low (FSIV2009).Many factors needto be addressed tosupport plantationdevelopmentFuture plantationprofitability will beaffected by supplyfrom naturalforestsSeveral publications have outlined requirements for improvedsupport for plantation development (e.g., Carle and Holmgren2008; Enters and Durst 2004). Key factors include:• Improved extension services and attention to plantingmaterial; silviculture, forest health and fire and invasive speciesmanagement;• Improved coordination between financial and forestry sectors;• Improved mechanisms for resolving conflicting land claims;• Improved information dissemination in relation to markets.• Advances in technology, particularly in:» biotechnology to produce high-quality reproductivematerials;» silviculture, forest health, fire management and invasivespecies management.In the medium term, it is unlikely that plantation resources willprovide a large-scale alternative to supplies from natural forestsat the subregional level without significant efforts to addressthese factors. In the longer term, improvements in markets forplantation-grown wood products can be expected as a result ofreduction in supplies from natural forests. When this reductiontakes place, and whether through forest protection or exhaustionof supplies, depends not only on effective forest protection butalso on efficient and well-orchestrated institutional and marketefforts to improve land-use planning and plantation production.20

STATUS AND TRENDS IN FORESTS AND FORESTRY2.1.4. Forest health and vitalityFires, pests, diseasesand loggingthreaten foresthealth and vitalityPoor quality loggingis a major concernThe health and vitality of forests in the GMS is threatened byseveral factors including fires, pests and diseases and degradationthrough forest fragmentation, excessive extraction and poorharvesting techniques. Fire has been a major cause of loss of forestvitality and in concert with logging and climate change poses aserious threat to forests in the subregion. Biodiversity lossesassociated with deforestation, forest degradation and collectionof plant and animal products also threaten the health and vitalityof the subregion’s forests as detailed in Box 2.9. Measurement offorest degradation remains problematic, however, and althoughestimates of growing stock suggest that forest resources arebeing degraded in most countries in the subregion, the accuracyof available figures is insufficient for detailed analysis (see Box2.1 and Table 2.3). Forest health and vitality and degradation arealso multifaceted concepts and cannot be captured by changes instocking density alone.Logging has perhaps the most significant impacts on foresthealth and vitality in the subregion in view of the generally lowquality of harvesting operations. Associated degradation hassignificantly reduced the present and future value of forests andalong with other influences may jeopardize the future economicand ecological viability of the subregion’s forests.Reduced impactlogging plays a rolein a few countries……but is not widelypractisedPast high-impactlogging threatensfuture sustainabilityFire poses furthersignificant threatIn general, reduced impact logging is not widely practised in thesubregion despite efforts to introduce better practices (Wilkinson2009). Cambodia is the only country where implementation of anational code of harvesting practice is mandatory. The code hasbeen in place since 1999 and although evaluation is undertakenby the Forestry Administration, results have not been madepublic. Implementation of the code has also been curtailed by thelogging moratorium.In Lao PDR and Viet Nam, reduced impact logging regulations andguidelines are not yet widely implemented and the capacity ofthe logging companies is very limited as is supervisory capacity. InMyanmar, although low impact elephant logging has been used inthe past, it is doubtful whether sustainable logging techniques oran annual allowable cut are still being adhered to and degradationof forest resources is widespread (Thaung 2009).Capacity building and institutional strengthening in relation toforest harvesting are necessary across the subregion although,even with improvements, the legacy of high impact logging maycurtail the economic viability of sustainable production in thefuture. This is particularly likely in forest types where stockingdensities are low or where commercial species are scarcer ordisproportionately affected by logging.In combination with the effects of uncontrolled logging andsubsequent forest drying, fire has become a major cause of forestloss in the subregion and poses a serious threat to remaining21

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportforest resources and to ecosystem stability. Across the GMS, fireis used by farmers as a low cost way of clearing land and by cattlefarmers to stimulate vegetation regrowth. Low intensity fires arealso used to reduce forest fuel loads and prevent devastatingfires. Uncontrolled and unmanaged fires, however, lead to largescaleforest damage every year and in Thailand, for example, fireprevention is one of the Royal Forest Department’s most importantand most costly activities (RFD/DNP 2009).Changing weatherpatterns haveincreased theincidence of fireFire managementmechanisms havenot generallyimprovedAdaptation offorest managementwill be necessaryto maintainenvironmentalvaluesThe increasing frequency of El Niño Southern Oscillation (ENSO)events over recent decades and the dry periods with which theyare associated in the GMS may, if trends continue, have devastatingeffects on the subregion’s forests. Droughts have normally beenassociated with El Ninõ years in Myanmar, Lao PDR and Viet Nam(Cruz et al. 2007, see Box 2.12). In addition to possible rainfallreductions, increased road development in previously isolatedareas and rising levels of human activity – including logging, useof fire as a management tool and accidental fires – are likely toincrease vulnerability to forest fires in the coming years. Rowell andMoore (2000), among others, have suggested that the changingweather patterns and increased levels of anthropic fire ignitionmay result in increasing cycles of forest devastation as burnedareas become progressively drier and recovery intervals contract.Over the past decade, responses have been limited and thesources of problems have, in many cases, remained untackled.For example, forest managers or local inhabitants usually do nothold responsibility for fire control and land tenure arrangementsmay promote short-term strategies and excessive use of fire asa management tool. Weak governance and ineffectual legal andregulatory systems may also hinder law enforcement with respectto fire (Rowell and Moore 2000).Addressing forest health and vitality and forest degradation inparticular has become a topic of much debate in anticipation ofa global mechanism to reduce emissions of carbon dioxide fromdeforestation and forest degradation. Improving the climatechange mitigation potential of forests and increasing stockingdensities are closely allied processes and, as such, climate changefunding could go far to improve the health and vitality of forestsin the subregion (Broadhead et al. 2009). Adaptation of forestmanagement is also likely to be necessary to achieve mitigationgoals. For example, maintaining ecosystem integrity such thatcarbon is not lost through forest drying and fire or ensuring thesecurity of pollinators and reproductive capacity are likely to benecessary long-term measures in utilizing forest potential forclimate change mitigation. Currently, however, there is no globallyagreed definition of forest degradation and forest cover definitionswill also have to be considered to ensure that carbon loss throughforest thinning does not go unnoticed (RECOFTC 2009; see alsoBox 2.1).22

STATUS AND TRENDS IN FORESTS AND FORESTRY2.2. WOOD AND WOOD PRODUCTSForest productsproduction has fallensteeply and then risenOver past decades forest product production in the GMS hasrisen as new frontiers have been opened and existing productionareas have become exhausted. In the GMS countries, there hasbeen a resurgence in wood production since 2001 as a resultof rising levels of demand following the Asian economic crisis(Figure 2.8). Thailand’s production, in particular, has risen inconnection with increased plantation production. Productionhas also increased in Viet Nam and Myanmar, while in Cambodiaa sharp reduction in 2000 is likely to have been connected withthe logging moratorium. Reasons for reductions in production inLao PDR are less clear and under-reporting may be a significantissue (EIA/Telapak 2008).Figure 2.8. Production of Industrial Roundwood in GMS countries, 1961-2007Source: FAO (2009).Note: Values displayed in the chart are stackedChina’s productionand consumptionhave ballooned andfocus has movedto more processedproductsWood product production and markets changed significantly inthe aftermath of the Asian economic crisis as China’s consumptionof industrial roundwood and other wood products ballooned andJapan’s fell. Between 1997 and 1998, Asia-Pacific consumption ofthe five major forest products fell by over 10 percent and differingtrends subsequently emerged among the product groups. By2002, production and consumption of industrial roundwood andsawnwood were still below 1997 levels whereas for more highlyprocessed products, production increased (Box 2.5; Broadhead2006). Wood-based panel consumption has risen steeply in recentyears, particularly with respect to more processed panel typessuch as medium density fibreboard (MDF) rather than plywoodand veneer. Similarly, growth in woodpulp and paper and paperboard consumption has been very rapid. By 2002, wood product23

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reporttrade volumes had regained pre-crisis levels for most productgroups, although prices have been slow to recover (ITTO 2003;Broadhead 2006).Box 2.5. Forecasts and reality – how good were forest products productionpredictions made in 1998?The 1997/1998 crisis impacted production of major forest products in differentways. Overall levels of wood products production fell, with less processed productsmore significantly affected (Broadhead 2006). The production of more processedproducts increased – presumably in response to supply constraints, switchingto plantation-grown wood and more concerted value addition efforts. Woodproducts trade in the subregion generally fell in the immediate aftermath beforelevelling out.Comparison of forecasts published in the first Asia-Pacific Forestry Sector OutlookStudy in 1998 with actual production figures shows that production of industrialroundwood, sawnwood and panels in the Asia-Pacific region was overestimatedwhereas pulp and paper production has risen beyond expectations. The followingspecific predictions were made under the economic downturn scenario. Points initalics outline the revealed situation:• Industrial roundwood production would increase from 89 to 120 millioncubic metres per year between 1994 and 2010.» By 2007 production had fallen to 78 million cubic metres.• Sawnwood production was expected to rise from 19.6 to 20.2 million cubicmetres by 2010.» In 2007 sawnwood production stood at 11 million cubic metres.• Panel production was expected to fall from 16.7 to 15.5 million cubic metres.» By 2007 production had fallen to 14.5 million cubic metres.• Paper and paper board production was expected to increase from 5.9 to 9.0million cubic metres.» By 2007 production had soared to 15.2 million cubic metres.In general, the volume of trade in wood products in Southeast Asia wasunderestimated, although industrial roundwood exports fell well belowexpectations. Panel imports and trade in paper and paper board exceededexpectations. Overall, however, the value of wood products exports fell significantly– partly as a result of currency realignments.Source: Broadhead (2006).Roundwoodconsumed in theAsia-Pacific regionis increasinglybegin sourcedoutside the GMSIn recent years, production in Cambodia, Lao PDR and Myanmar hasincreasingly supplied the region’s wood product manufacturingcentres in Viet Nam and China (Katsigris et al. 2004; EIA/Telapak2008). Despite increased production in Southeast Asia, China, theAsia-Pacific region’s main consumer, has to a large extent satiatedsoaring demand with supplies from elsewhere – the Russian FarEast in particular. Supply from Myanmar has risen but is poorly24

STATUS AND TRENDS IN FORESTS AND FORESTRYrecorded as most imported timber is harvested by Chinesecompanies working in areas outside of government control (Kahrlet al. 2004). As supplies of the main commercial timbers fromnatural forests have fallen, intermittent efforts have been madeto increase buyers’ interest in lesser known tree species, butpreferences have generally remained conservative.Value additionhas increased andprocessing centreshave movedIn general, countries that have passed their logging peak havemade efforts to add greater value to wood products than thosewith larger timber reserves (Katsigris et al. 2004). The rise of Chinaas the region’s major importer has, however, signalled increasingdemand for less processed products – industrial roundwood,sawnwood and woodpulp – due to low wage rates and emphasison domestic manufacturing. For the same reason, demand fromChina for more processed products including, plywood and paperand paper board, has been constrained.2.2.1. Recent market developmentsThe globaleconomicslowdown hasshaken the forestproducts sectorTrade volumes andprices have fallenThe future path forthe region’s woodproducts producersis not yet clearThe wood and wood product sector in the GMS is undergoing majoradjustment following the 2008/2009 global economic slowdown.Consumption and trade dropped as demand in major markets fellin 2009. Reductions in housing starts in Japan and the United Statesare particularly important and furniture markets in the UnitedStates also continue to affect manufacturers in Southeast Asia(ITTO 2009f ). China’s log imports fell in 2008 and by February 2009,the downturn had led to the closure of 7 000 furniture factories(ITTO 2009a; ITTO 2009d). The plywood and forest product tradein China was also hit, while EU sawnwood and plywood marketsstagnated (ITTO 2009a; ITTO 2009b). Around the region, trade hasfallen, mill closures have been widespread with low sawnwooddemand from Europe and furniture demand from the US beingchiefly to blame (ITTO 2009a, ITTO 2009e). In Myanmar, log salesalso fell to new lows in January 2009 (ITTO 2009b; ITTO 2009e).Despite maintaining import levels during 2008, China’s woodproduct demand slowed in 2009 as markets for wooden furnitureand other finished products fell (Ze Meka 2009). Some recovery intrade volumes and prices was taking place during the first quarterof 2010, with China showing the most activity while the EU andUnited States continued with low demand (ITTO 2010b).It is not yet clear how the forest product industry will weather theeconomic turbulence. Countries best able to cope are expected tobe those with less focus on traditional export markets (especiallythe United States/Europe), with a diverse product range, flexiblelabour forces and relatively robust domestic markets. However,even countries meeting many of these criteria are facing problems(Ze Meka 2009). Against the general trend, however, China’s forestindustry showed output value gains in 2009 and increased exportof wood products to ASEAN countries following the removal oftariffs at the beginning of 2010 (ITTO 2010a; see Box 2.6).25

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportBox 2.6 Guangxi’s forest products industry booms despite market conditionsThe forest products industry in Guangxi Autonomous Region has been boomingdespite the financial crisis. This is evidenced by the following:(1) The output of wood-based-panels has continued to increase, with 946 000 m³of wood-based panels produced in first quarter of 2009, up 61 percent overthe same period of last year. Eucalypt plywood for interior decoration sellswell because of good quality and supply has even fallen short of demand.(2) Production capacity for wood-based panels continues to expand. Nineprojects producing wood-based panels with a capacity of 300 000 m³ andan investment of RMB 200 million yuan have been approved by the ForestryBureau of Guangxi. Another four projects with a capacity of 350 000 m³ andan investment of RMB 750 million yuan remain to be approved.(3) Outputs of paper and paper board amounted to 135 900 tons, up 61 percent.(4) Rosin production jumped nearly 30 percent, with 22 000 tons of rosinproduced.(5) The number of closed wood-based panel enterprises declined. Only 10 ofthe 128 plywood mills in Guangxi stopped production despite the economicconditions.Source: ITTO (2009g)Restructuring oftimber marketscould significantlyaffect GMS forests.Sawnwoodproduction inSoutheast Asia hasfallen steadilyA major concern for the GMS forest products sector is that thedepth of reductions in demand in higher paying markets – theEuropean Union and the United States of America in particular– will precipitate a restructuring of markets to the detriment oftropical timber producers. Preferences for lighter coloured woods,demands for legally verified and sustainably produced productsand competition from non-wood substitutes could furthercontribute to such a scenario. At present, the situation does notlook promising and the repercussions of reduced demand onGMS forests could be substantial.The following sections review longer term trends in the knowledgethat the subregion is in a period of transition.Industrial roundwood 6Industrialroundwoodproduction roseafter 2001Following the Asian economic crisis, production of industrialroundwood in the GMS began a gradual recovery after 2001as shown in Figure 2.9. The subregion’s emergence fromrecession combined with the stimulating effect of exchange rate6 Roundwood used in the production of other goods, comprising (i) sawlogs and veneer logs(ii) pulpwood and (iii) other industrial roundwood, excluding wood fuel. Measured in cubicmetres, excluding bark.26

STATUS AND TRENDS IN FORESTS AND FORESTRYrealignments in 1997/1998 and increasing demand – primarilyfrom China – resulted in roundwood production increasing slowlyup to 2007.Production in theMekong countrieshas climbed since1997Production in the GMS has climbed as a proportion of totalproduction in Southeast Asia from 13 to 22 percent between 1997and 2007. Thailand’s production tripled over this period, whilein Myanmar production rose by 30 percent. Production in VietNam remained steady while in Lao PDR and Cambodia recordeddeclines in production. Increased production in Myanmarcorresponds to increases in the area of forest designated forproduction, whereas in Thailand, production from plantations hassupported the increase. In Cambodia, the logging moratorium islikely to have been the main cause for production decline and inLao PDR under-reporting may play a role in production trends (seeEIA/Telapak 2008).Figure 2.9. Industrial Roundwood production in GMS countries, 1997-2007 7Source: FAO (2009).SawnwoodSawnwoodproduction in theGMS has increasedSawnwood production in Myanmar and Viet Nam has increasedsteeply over the past decade. In Myanmar, clearance of forestareas has resulted in increased production whereas in Viet Nam,7 Production figures for some countries may have high error margins, for example, it has beenestimated that around 500 000 cubic metres of logs move every year from Lao PDR to Viet Nam,despite a log export ban, and that at least 600 000 cubic metres were harvested in 2006 (EIA/Telapak 2008). Industrial roundwood production reported to FAO by Lao PDR was only 194 000cubic metres. Industrial roundwood production figures reported to FAO by Cambodia weresimilarly low at 113 000 cubic metres in 2006. DAI estimated 4.3 million cubic metres of industrialroundwood were harvested in 1997 when the figure provided to FAO was 1.04 million (DAI 1998cited in Nophea 1999).27

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportvigorous plantation establishment programmes are yieldingbenefits, although productivity has been below expectations(Tun 2009; FSIV 2009). In the Asia-Pacific region as a whole, growthat around 5 percent per annum has been seen since 2001 – areflection of rising production in China.Trade is playing anincreasing roleViet Nam’s sawnwood imports have increased to around half amillion cubic metres over the past decade while Thailand’s haveaveraged about 1.5 million cubic metres per year with considerablefluctuation. Imports to other countries are insignificant andThailand is the only significant exporter in the region, but withvolumes falling from 2 to 1 million cubic metres between 2003and 2007.Figure 2.10. Sawnwood production in GMS countries, 1997-2007Source: FAO (2009).PanelsThailanddominates GMSpanel productionChina’s plywoodproduction hassoaredIn volumetric terms, Thailand dominates wood-based panelproduction in the GMS, accounting for two thirds of subregionalproduction in 2007. GMS production, however, only accountedfor 14 percent of the Southeast Asia total. Particle board (chipboard), medium density fibreboard (MDF) and plywood accountfor the bulk of GMS production and in Thailand, particle boardand MDF dominate. Production of both panel types increasedrapidly between 1998 and 2002 before levelling off. Productionof several board types has also expanded in Viet Nam since 2003with production reaching 559 cubic metres in 2007.The Asia-Pacific trend in panel production is driven by China whereoutput of all board types has increased rapidly since 1998. In 2007,China’s production of wood-based panels reached 71 million cubicmetres, dwarfing amounts manufactured in the GMS. Production28

STATUS AND TRENDS IN FORESTS AND FORESTRYin Malaysia and Indonesia is also significant, reaching 7.7 and 4.3million cubic metres respectively in 2007.Figure 2.11. Panel production in GMS countries, 1997-2007Source: FAO (2009).WoodpulpWoodpulpproduction isrising across thesubregionWoodpulp production in Southeast Asia is dominated byIndonesia, although within the GMS, Thailand and Viet Namare also increasing in stature (Figure 2.12). Production in boththese countries rose rapidly between 1997 and 2007 from 10to 24 percent of total woodpulp production in Southeast Asia.Expansion of pulpwood plantations has begun to yield results inboth countries, whereas in Indonesia, the largest producer in thesubregion, natural forests remain crucial in supplying the industry.Figure 2.12. Woodpulp production in GMS countries, 1997-2007Source: FAO (2009).29

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportPaper and paperboardPaper and paperboard productionhas grown slowlyPaper and paperboard production in Southeast Asia is dominatedby Indonesia, but with significant proportions also coming fromThailand and Viet Nam (Figure 2.13). Growth in production inSoutheast Asia slowed after the turn of the millennium, whereasgrowth rates in China increased substantially. Expansion inThailand and Viet Nam has also been rapid with productionjumping by 80 percent and 60 percent respectively between 2002and 2007. The Thai pulp and paper industry has been blightedin the past by supply problems but recent capacity increasessuggest that problems have to some extent been overcome,although debate continues (Bangkok Post 2009). Significantinvestments in the pulp and paper industry have also been madein Viet Nam in recent years and expansion to supply the growingdomestic market looks set to continue.Figure 2.13. Paper and paperboard production in GMS countries, 1997-2007Source: FAO (2009).2.2.2. Trade in forest productsThe huge influenceof trade on forestrylooks set tocontinueTrade has been seen as a primary culprit for tropical deforestationin Southeast Asia and as such is a highly important driver ofchange. Developments in relation to trade are likely to havesignificant effect on forests and forestry in Southeast Asia duringthe next decade. In particular, changes in trading regimes in highpayingmarkets may cause significant changes in forestry – eitherby encouraging greater legality and sustainability or by closingoff import markets where countries fall short of requirementsfor market entry. The impacts of general alterations in trade andtrading regimes are covered in Section 3.3. This section reviewspatterns in trade over the last decade and current status of forestproducts markets.30

STATUS AND TRENDS IN FORESTS AND FORESTRYChina has becomethe Asia-Pacific’sprimary importerof forest productsThe value of theGMS forest producttrade has fallenIn 1998, the first Asia-Pacific Forestry Sector Outlook Studypredicted that Japan would remain the main driving force indetermining patterns of forest supply, demand and trade withinthe region. By the time of publication, however, China had alreadybecome the primary importer by value. By 2002, China’s share ofregional imports had risen to 44 percent by value compared toJapan’s 26 percent. Major wood products trade flows in the GMS in2006 included exports of roundwood from Myanmar to India andChina (ITTO 2007). Significant amounts of sawnwood were alsoexported from Thailand to China. Overall, however, trade flowsinvolving the lower Mekong countries were relatively minor incomparison with those from Malaysia and Indonesia.By value, forest products trade in the GMS contracted after 1997– partly as a result of currency adjustments related to the Asianeconomic crisis (Figure 2.14). Between 1998 and 2007, woodproducts import value increased by two and a half times withThailand and Viet Nam behind the subregional trend. Export valuedropped by a quarter over the same period. Export value has,however increased since 1998 in Thailand and Viet Nam despitethe overall trend (Figure 2.14).Figure 2.14. Forest products export value for GMS countries, 1997-2007Source: FAO(2009).Thai roundwoodimports haveincreased since thelogging banIn Thailand, imports have played a leading role in meeting demandfor sawnwood and plywood following the logging ban of 1989.Rubberwood production is increasing and although suitable forplywood manufacture in purpose-designed mills, log importsare necessary to support the wider plywood industry (RFD/DNP2009). Log imports are also necessary to supply constructiontimber as rubberwood is unsuitable. As a result, about two-thirds31

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportof consumed sawnwood is imported, mostly for construction.Thailand also exports (mainly eucalyptus) wood chips and sawnrubberwood to China and Malaysia. Rubberwood furniture is alsoexported – mainly to the United States, Japan and the EU.Russian exports toChina dwarf thosefrom Malaysia andMyanmarThe GMS isimporting moresawnwoodGMS imports ofmore processedproducts are risingOther important trends in the past decade include Myanmar’sincreased export of industrial roundwood to China. In 2006,imports were valued at almost US$1 billion or 3 percent of China’stotal industrial roundwood imports by value. 8 The value of thistrade has more than tripled over the last decade but is dwarfedby US$23.3 billion of imports from the Russian Far East and US$2.6billion from Malaysia.GMS sawnwood imports have increased over the last decadeas production has fallen. By value, Thailand’s importance as animporter of Malaysian sawnwood increased between 2002 and2006. In contrast, despite China’s increasing levels of sawnwoodimports, Indonesia and Malaysia’s shares by value had both fallenby 2006 to below a third of their 1998 levels. At the same time,Thailand’s share increased from 2 to 12 percent, suggesting anincreasingly competitive sawmilling sector.GMS imports of panels more than quadrupled between 2002 and2007 to 845 thousand cubic metres while exports increased 2.5times to 2.6 million cubic metres; Thailand’s export of particleboardand MDF accounting for the majority of the increase. GMS importsof paper and paperboard also more than doubled between 2002and 2007 to 1.5 million cubic metres – Viet Nam and Thailand bothhaving shown increases. GMS exports of paper and paperboardonly increased marginally over the same period to one millioncubic metres.2.2.3. State of forest industries and wood processing technologyForest industrieshave faced andare facing rapidchange in the GMSOvercapacityand out-of-datetechnologythreaten SFMAs timber supply constraints have emerged in the GMS, theimportance of industrial efficiency and value addition hasincreased. Countries have switched progressively from export ofunprocessed logs to value addition – particularly in Viet Nam andThailand – as supply constraints have emerged and labour rateshave increased. The lower income countries, however, suffer fromout of date, inefficient machinery, low skill levels, low investment,poor techniques and poor penetration of higher paying markets.Most are also burdened with excess processing capacity.In general, overcapacity in the sawmilling sector is threateningSFM in most countries. Efforts to reduce capacity and focuson value addition have been successful in some countrieswhere skilled or semi-skilled labour and infrastructure exist andinvestment is available. In other countries, supplies have beenimported, helping to maintain operating capacity. Viet Nam, for8 According to trade statistics reported to FAO by China.32

STATUS AND TRENDS IN FORESTS AND FORESTRYexample, has a large and diverse wood-processing industry withinstalled capacity exceeding production due to diminishingdomestic timber extraction (FSIV 2009). The technology used inViet Nam’s wood-processing industry and pulp and paper industryhas improved, although there is still a big gap in comparison withthe most advanced countries.Wood-processingcentres areincreasinglyfocused on a fewcountriesFurther shifts arelikely to occuras businessconditions changeWhile Viet Nam, and to some extent Thailand, have investedsignificantly in processing, the lower income countries – Cambodia,Myanmar and Lao PDR – have very limited capacity (Katsigris et al.2004). Processing has therefore taken place in adjacent countries oroverseas and value addition has been low. The rise of the outdoorfurniture industry in Viet Nam, which depends on importedtimber and overseas markets, and sawmilling of Malaysian logs inThailand are two examples of this trend.In coming years, it is likely that investment in the wood-processingindustry and wood-processing technology will increase in somecountries as shifts occur in supply, investment and labour costs.This is particularly likely in the higher income countries which maycontinue to process wood supplied by lower income countries.The focus on domestic processing in China is likely to support thistrend, although in the medium term, rising wage rates in bothChina and Viet Nam may mean that processing moves elsewhere.2.2.4. Contribution of forestry to national economiesEmployment inforestry and thewood industry hasfallenEmployment inwood processinghas increased inViet NamAn analysis of the contribution of formal 9 forestry activities toGMS economies showed that employment in forestry 10 and thewood industry 11 fell over the past decade, whereas employmentin the paper and furniture industries increased (Figure 2.15; FAO2008c). In Thailand, Cambodia and Lao PDR fewer people areworking in forestry as forest resources have become depletedor protected and other economic sectors have grown. In thewood industry, the subregional employment trend has beensignificantly influenced by Viet Nam where employment has beenrising at over 26 percent per annum between 1996 and 2006 dueto an abundance of cheap skilled labour, a high rate of economicgrowth and availability of forest resources.The rising trend in employment in the paper industry in the GMSis largely due to increases in Thailand and Viet Nam, at 7 and 14percent per annum respectively between 2001 and 2006. Theexpansion of the subregion’s furniture industry has, in large part,been due to growth in Viet Nam, with employment increasing at28 percent per annum over the period 2001-2006.9 All informal forestry sector activities are excluded because they are significant in manydeveloping countries, figures presented are an underestimate.10 Defined as ‘forestry, logging and related service activities’.11 Defined as ‘manufacture of wood and of products of wood and cork, except furniture;manufacture of articles of straw and plaiting materials’.33

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportFigure 2.15. Forestry sector and furniture industry employment in the GMS,1996-2006Source: FAO (2008c).Viet Nam is theregion’s largestforestry sectoremployerIn absolute terms, forestry sector employment in 2006 was highestin Viet Nam where 407 000 people were employed, mostly inthe furniture industry (Figure 2.16). In comparison with primaryforestry activities, the importance of value addition in Viet Namand Thailand is evident in Figure 2.16. Myanmar shows theopposite trend, with greater focus on production than processing.Figure 2.16. Forestry sector and furniture industry employment in GMScountries, 2006Source: FAO (2008c).Forestry sectorproportions of GDPand employmentare contractingAs a percentage of the total workforce, forestry sector employmentin 2006 (excluding the furniture industry) was 2.3 percent inMalaysia – considerably higher than in other Southeast Asiancountries where less than 0.5 percent of employment is in the34

STATUS AND TRENDS IN FORESTS AND FORESTRYforestry sector. In all countries except Myanmar, Viet Nam andThailand the proportion of employment in the forestry sector isfalling. Between 2001 and 2006, the contribution of the formalforestry sector to GDP (excluding the furniture industry) of allcountries in Southeast Asia except Viet Nam also fell. In Myanmar,the Philippines and Thailand, forestry contributed less than 1percent to GDP in 2006, whereas in all other countries in SoutheastAsia the figure fell between 2 and 3 percent.2.3. NON-WOOD FOREST PRODUCTSNWFPs are diverseand cannot bemanaged as asingle groupTable 2.4. NWFP classes adoptedin the 2005 FAO forest resourcesassessmentPlant productsFoodFodderMedicine/aromaticsColorants/dyesUtensils/handicrafts/constructionOrnamental plantsExudatesOther plant productsAnimal productsLiving animalsHides, skins and trophiesHoney and beeswaxBushmeatMedicineColorantsOther edible animal productsOther non-edible animal productsThe FAO forest resources assessment groups non-wood forestproducts (NWFPs) into 16 classes as shown in Table 2.4. NWFPsdiffer greatly in relative importance to different groups and someof the least economically valuable products may at the same timebe essential for local-level subsistence needs. This diversity ofvalues together with the diversity of NWFPs themselves and theassociated lack of statistical information makes formulation ofappropriate policy a challenging task.NWFP groups may be classified accordingto production system (wild collection vscultivation) and the economic strategyof producers (subsistence, diversified orspecialized; Ruiz-Perez et al. 2004). Based onthese categories the following groups may beidentified: (i) Subsistence – including a widerange of NWFPs including many medicinesand foods that are primarily collected fromthe wild are less frequently traded due to lackof demand or poor market development;(ii) Commercial – including foods, exudates,some medicines and many other productsthat are collected from the wild or cultivatedon a small scale and traded in national andregional markets; (iii) Industrial – includingsome construction/handicraft materials –rattan and bamboo in particular – and someexudates and aromatics. These products areof higher economic value, and are mostlycultivated and traded formally in internationalmarkets. The three groups have differingproduction, trade and other characteristicsas outlined in Table 2.5. As markets expand,some products are likely to advance througha succession from subsistence to commercialto industrial. Inferior products and those which cannot be successfully managed are,however, likely to recede. Outcomes will depend on several factors including demandfor individual products, ease of production/domestication, institutional frameworksand entrepreneurial activity.35

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportTable 2.5. NWFP categories and characteristicsNWFPgroupNo. ofproductsImportance Production SupplyEconomicvalueMarketsValueadditionSubsistence Many Livelihoods Gathered Unstable Low Informal Low Commercial Fewer Intermediate Intermediate Intermediate Higher Informal Low Industrial Few Income Cultivated Stable High Formal HigherRattan andbamboo are themost importantNWFPs in AsiaIn Asia, the most economically significant products, in order ofimportance, are rattan and bamboo, medicinal plants, essentialoils, resins, pine nuts, mushrooms, spices and herbs (mainlycardamom and cinnamon), fodder, animal products, honey andlac (FAO 2002). Table 2.6 shows the main NWFPs in GMS countriesby importance. Global trade in NWFPs is dominated by China andIndia, followed by Indonesia, Viet Nam, Malaysia, the Philippinesand Thailand.Table 2.6. Main NWFPs in GMS countriesCountryCambodiaLao PDRMyanmarThailandViet NamMain NWFPsResin, rattan and bamboo, mushrooms, medicinal plants and incenseMedicinal plants, food (nuts, fern roots, fruits), fibres, exudates (damarresin, oleoresin, benzoin), incense, spices, orchidsBamboo, rattan, edible bird nests, natural rubber, spices, medicinalplants, tanning barks, perfumes, exudates, honey and beeswax,bushmeat, lac and bat guanoBamboo, rattan, lac, honey, gums and resins, spices, medicinal plants,food and bark for tanning and dyeingHandicrafts (rattan and bamboo), resin, essential oils, medicines,spices, mushrooms and honeySource: FAO (2002).Rattan productionis falling andplantations areslow to take offRattan exportshave fallen andsubregionalmarkets are indeclineRattan is the most important internationally traded NWFP.Asian rattan resources are, however, being depleted throughoverexploitation and forest loss. Although Lao PDR retainssignificant resources, in Thailand, Myanmar, Viet Nam andCambodia, the long-term sustainability of rattan-processingindustries has been undermined by the depletion of stocks.Investment in industrial-scale rattan plantations is negligible anduncertainty surrounds future supply.Due to falling supply, Thailand has banned harvesting of rattan innatural forest and export in its raw form (RFD/DNP 2009). Rattanhas been planted on a small scale but private investment has beenstemmed by a lack of technical expertise, the long rotation period,and inadequate promotion. Nationwide, there are more than 200rattan furniture factories but only three large factories export theirproducts. Due to local supply shortages, rattan is imported from36

STATUS AND TRENDS IN FORESTS AND FORESTRYaround the region, but volumes are falling and the value of rattanexports has declined considerably in recent years (RFD/DNP 2009).Bamboo isincreasingly grownas a crop andproduction hasrisen dramaticallyBamboo isincreasingly grownin plantationsPine anddipterocarp forestsprovide resinsand associatedemploymentLac, is an otherimportant productSustainablymanaging NWFPsconstitutes amassive challengeBamboo is by far the most commonly used NWFP in Asia andinternational trade in bamboo products has increased dramaticallyin the last decade (FAO 2002). Within the GMS, China and Thailandare the main international suppliers of bamboo and Viet Namalso exports. Bamboo shoots supply a rapidly expanding exportmarket, with China the world’s largest producer and exporterfollowed by Thailand. Bamboo is also becoming more widely usedas a raw material for industrial products including constructionpoles, panelling and flooring and pulp. Bamboo from naturalforests is still important in Myanmar, Lao PDR, and in mountainforests in Viet Nam but increasingly, bamboo is grown as a crop.In Thailand, a 1998 survey estimated the national area of bamboo at800 000 hectares (RFD/DNP 2009). About 80 percent of productionis for non-industrial uses and 20 percent for pulp manufacture,although the latter has been declining. Unrestricted harvestingof bamboo from forests has led to supply shortages and farmershave begun planting on a large scale with around 10 700 hectareshaving been established through extension programmes (RFD/DNP 2009). Viet Nam also has extensive bamboo forests amountingto almost 1.5 m hectares, of which around 73 500 hectares areplantation (FSIV 2009).Countless other products, many gathered from natural forests,are commercially important in the region. Extensive pine forestsprovide products including resins, seeds and mushrooms. InThailand, resin has been tapped from pine trees for centuries andit is estimated that the pine resin industry has the potential tocreate 25,000 jobs in rural areas (RFD/DNP 2009). Oleoresin andgums are obtained from two native pine species, Pinus kesiya andP. merkusii, but only the latter is being tapped commercially. Pineforests are located mainly in the north and northeast and, allowingfor mixed stands, amount to around 216 200 hectares. Tappingdipterocarp trees is another important source of income for manyforest dwellers in Cambodia in particular and also Thailand, butthe extent of the activity is not well quantified.Thailand is the second largest lac producing country afterIndia with supply coming from natural forests in the north andnortheast of the country. Production peaked in the mid-1980s andin the early 1990s there were more than 50 000 families involvedin production and 20 licensed lac processing plants in operation(RFD/DNP 2009). Viet Nam also produces lac and exports around300 tonnes annually (FAO 2002).Many NWFPs important in local commercial activity are, alongwith purely subsistence products, also of importance in providinga safety net for the subregion’s forest-dependent people –particularly in times of hardship. Deforestation, unsustainable useof forest resources and overcollection of NWFPs threatens this37

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportrole. To achieve sustainable management of NWFPs and preservesubsistence values in the face of advancing markets constitutesa massive challenge in the subregion. Generally, with increasesin demand, resources are depleted and benefits are infrequentlycaptured by forest-dependent people.Many obstaclesface NWFPdevelopmentMany NWFPs arethreatened butefforts are beingmade to improvemanagementMany other problems face equitable NWFP development: poorstatistical information; unpredictable harvest levels; unknownecology and management; indistinct property rights; lack ofmarket information and business expertise at the local level; poorquality control; and marketing and low investment. In Lao PDR,where NWFPs account for between 40 percent and 90 percent ofhousehold income, many of these issues have been revealed andconfronted as the following trends confirm (UNDP 2001; Foppesand Phommasane 2005):• A rapid increase in cross-border demand.• Rapid depletion of some NWFP resources, e.g., bark, orchidsand rattan.• Increasing conflict between communities in relation to theshared use of forest resources.• Local initiatives to domesticate NWFPs in gardens.• Increasing awareness of the need for more efficient marketregulations.Similarly in Myanmar, although production of NWFPs has increasedfor almost all officially recognized products, unsustainableharvesting has prompted inclusion of plans for systematicmanagement of NWFPs in the National Forest Master Plan (Tun2009). Box 2.7 details the situation in Viet Nam where the potentialof NWFPs has been recognized and efforts to facilitate NWFPdevelopment are at an advanced stage.Box 2.7. NWFP management in Viet Nam – from national to local levelsThe most important areas for NWFP production in Viet Nam include bambooforests – mostly within natural forests – rattan stocks of around 382 000hectares within natural forests, resin trees covering an area of 256 000 hectaresand cinnamon trees covering 81 000 hectares. Pine resin and essential oils arealso of significant importance. In 2004 the total export turnover of NWFPs wasUS$200 million, 2.5 times that in 1999.State management of NWFPs concentrates on creating a legal framework forNWFP conservation and development. At the provincial level, the Departmentof Agriculture and Rural Development grants licences for bamboo exploitationin production and protection forests. District People’s Committees grant licencesto forest owners including households, individuals and communities and issueregulations concerning NWFPs. Since 1992, the government has encouragedinvestment in forests and preferential interest rates are given where NWFPmanagement is included. Additionally, the government reduces taxes in relationto NWFP planting. Recently, the government has promulgated an action planfor 2007-2010 on NWFP protection and development and a project on NWFP38

STATUS AND TRENDS IN FORESTS AND FORESTRYpreservation and development will run between 2006 and 2020. By 2020 thefollowing changes are expected:• NWFPs are expected to represent 20 percent of total forest productproduction, and export turnover is expected to increase at an average of15-20 percent per year. Bamboo and rattan are, however, increasing at over30 percent per year.• 1.5 million mountainous rural labourers will be employed in collecting,processing and trading NWFPs, accounting for 50 percent of the totalforestry sector labour force.• 15-20 percent of income in rural households will come from NWFPsResults are, however, highly dependent on progress with national landallocation programmes. Delays in implementation are likely to undermineNWFP management and depletion of stocks is likely to result.Source: FSIV (2009).2.4. THE SERVICE FUNCTIONS OF FORESTSForest services arebeing erodedCalls for furtherforest protectionare growingPayments forenvironmentalservices have notyet taken offForests are the cornerstone of the subregion’s flora and fauna andalso protect watersheds, store carbon and provide locations forrecreation and ecotourism. Forest conversion and degradationreduce the supply of forest services and collection of wildlifefor consumption and trade also threatens biodiversity in thesubregion. In the face of rapidly advancing economic frontiersand increasing consumption of natural resources the importanceof protection forests and forests in protected areas is growing.In past decades, forest protection measures, includingestablishment of protected areas and logging bans, haveconstituted the most significant policy shifts to have occurredin GMS forestry development. Increasing awareness of theimportance of the service functions of forests and of thediminishing extent of forest resources is likely to significantly affectthe face of forest management in the subregion by 2020. Climatechange-related policy and the direct effects of climate change onforests are particularly likely to drive forest sector development,but questions still remain over institutional mechanisms bestsuited to stimulating production of forest services.Recently, payments for environmental services have gainedpopularity as a way to promote production of benefits from forestsand other natural resources. Implementation, has, however, beenconstrained and analysis suggests that payments will only besuccessful in providing benefits under certain circumstances (Box2.8). Other mechanisms supporting non-extractive utilizationof forests, including state control and community ownership,are likely to be further refined in the coming years as demandson forests switch increasingly from products to services.39

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportBox 2.8. Payments for environmental servicesAs a means of maintaining production of environmental services from forests,dedicated payments or ‘payments for environmental services’ (PES) have receivedmuch attention in recent years. Implementation of such schemes in Southeast Asiahas, however, been limited. A number of practical problems outlined by Wunder(2007) suggest the scope for PES may be limited and that case by case analysisis necessary to determine the appropriateness of PES schemes relative to othermechanisms such as conservation and development projects or land purchase.Challenges include determining who should be paid, what they should be paidfor, what the production baseline is and whether the services are actually beingprovided. Lack of clarity over tenure – especially in remote areas – and differencesin de facto and de jure rights erode the operability of PES because it is not clearwho should be paid to provide the service. Where many people benefit from theutilization of resources it is also not generally feasible to pay them all off.In much of Southeast Asia, forests are located in more remote areas whereownership rights are unclear or de jure state ownership without enforcementcreates open access or promotes corruption. Under such situations it is likely thatthose who exert practical control would have to be bought off – e.g., loggers,consumers and intermediaries and local government. Ironically, if local people donot actually threaten the forest, PES logic says that they should not themselves bepaid. Furthermore, with high timber values and opportunity costs, it may be thatadequate funds would not be available to cover losses and payments would alsohave to be made in perpetuity.Because of these issues, PES may best target the margins of profitability wheresmall payments to landowners can tip the balance in favour of the desired landuse. As such, it may be that logged-over forests on poor soils would offer thegreatest opportunity for PES schemes. As for who should be paid, actors withclaims relating to the service provided may be best advised to form a conservationalliance which includes those with the right to exclude.Source: Wunder (2007).Forests providemany services inparallelUndervaluation of forests due to the limited scope of market andinstitutional systems to manage non-commodity values continuesto pose a threat to forests in the subregion. Institutional jurisdictions,both at the national and international level, are often fragmenteddue to the array of goods and services produced by any one areaof forest. The following sections assess status and trends in theproduction of services related to conservation, climate change andprotection of land and water resources. It is, however, emphasizedthat all forests serve these purposes to a lesser or greater extent.2.4.1. Conservation of biodiversityThe biodiversityof the GMS isexceptionally richand increasinglythreatenedForests contain as much as 90 percent of the world’s terrestrialbiodiversity and levels of species richness and endemism areparticularly high in tropical forests (Schmitt et al. 2008). Protectedareas provide a recognized means of conserving ecosystems andspecies and much of the terrestrial biodiversity within Southeast40

STATUS AND TRENDS IN FORESTS AND FORESTRYAsia is contained within forests (Sodhi et al. 2004). The GMScountries cover a large section of the Indo-Burma biodiversityhotspot, where biodiversity is both globally significant and underconsiderable threat (Myers et al. 2000; see Box 2.9). 12 A wide varietyof ecosystems are represented in the region, including mixed wetevergreen, dry evergreen, deciduous, and montane forests as wellas shrublands and woodlands on karst limestone outcrops andmangroves. The regional pattern of forest cover change shows that,apart from less accessible and mostly mountainous areas, most ofthe remaining forest cover is affected by change and that areas ofchange frequently overlap with protected areas and national parks.This situation indicates a severe challenge for the biodiversity of theregion, and indeed the world, given the levels of species richness inthe subregion (Stibig et al. 2007).Box 2.9. Biodiversity crisis in Southeast AsiaMuch of Southeast Asia’s considerable biological diversity is contained withinforests and with four of the world’s 25 biodiversity hotspots adjoining inthe subregion, forestry-related decisions and activities have considerablerepercussions. Reduction of forest cover has significantly greater impact on levelsof biodiversity than invasive species, climate change, nitrogen deposition or otherthreats. Species richness is also reduced by logging – in relation to intensity ofoperations – and regeneration of forest following clearance does not reach paritywith primary forest in terms of species richness.In combination with climate change and the increasing frequency of El Niñoevents, reduction in forest density and forest fragmentation can lead to increasingchances of catastrophic fire and a resultant acceleration of species losses. Thewildlife and bushmeat trade has reached unprecedented levels in SoutheastAsia with greater forest access and increasing demand behind the upsurge. TheConvention on International Trade in Endangered Species (CITES) and otherinternational agreements often remain unenforced and much of the supplyoriginates in ‘protected’ areas.In the midst of this predicament, the biodiversity of Southeast Asia remainsunderresearched in comparison with South and Central America and sub-SaharanAfrica and protected areas often remain protected in name only. Containing andreversing losses will take a multinational and multidisciplinary effort involvingpublic awareness raising, adequate protection and economic incentives forconservation.Based on Sodhi et al. (2004).‘Empty forestsyndrome’threatens inthe GMSWorldwide, consumptive use of biological resources,predominantly poaching, along with habitat conversion andmodification of ecological processes represent serious threats toconservation. The ‘empty forest syndrome’ threatens the GMS and12 Conservation International defines 34 global biodiversity hotspots as regions containingat least 1500 species of endemic vascular plants (> 0.5 per cent of the world’s total) having lostat least 70 per cent of the original habitat.41

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportuncontrolled exploitation of wild plants and animals is having adevastating effect on biodiversity (Traffic 2008). Huge demand forwildlife for food, medicine, pets, display and fashion, particularlyfrom China, has led to increased trafficking and many wildlifespecies with high commercial value are now rare, endangered orlocally extinct – including the tiger, Asian elephant, freshwaterturtles and tortoises, agarwood and numerous wild orchidspecies. The trade not only undermines biodiversity but alsocurtails sustainable development and poverty alleviation for thosedependent on wildlife for subsistence. This is particularly prevalentin lesser developed areas within the subregion. Development ofroads and infrastructure, expansion of logging and encroachmentinto pristine areas have increased access to wildlife and levelsof extraction have risen markedly in the past decade. Increasingwealth has been another key driver.The extent to whichdifferent forestsare protected isuncertainDesignated IUCNcategory is ofconservationsignificanceForest areadesignated forconservation isincreasingThe Convention on Biological Diversity (CBD) calls for the effectiveconservation of at least 10 percent of each of the world’s foresttypes by 2010. The percentage of protected forest area withinSoutheast Asia’s ecoregions is high in comparison with manyother global areas (Schmitt et al. 2008). Due to deficiencies inassessment frameworks and limited data availability, levels ofprotection by forest type are, however, not fully known. A totalof 28 (41 percent) of the 68 World Wide Fund for Nature’s (WWF)ecoregions in Southeast Asia are estimated to have less than 10percent of their area included in The World Conservation Union’s(IUCN) category I-IV protected areas. Twenty-one of the ecoregionshave more than 20 percent of their land area under protection(Birdlife International and IUCN 2007).The designated IUCN category is closely related to the effectivenessof protected areas and there is usually a clear and explicit tradeoffbetween biodiversity conservation and other human values inthe less strictly protected areas (WWF 2004, 2007). In almost allcountries across the GMS protected areas are designated acrossa broad range of categories. 13 In Lao PDR, however, all protectedareas are IUCN category VI, 14 i.e., managed mainly for thesustainable use of natural ecosystems.Statistics reported to FAO show that the area of forest designatedfor conservation in the GMS increased by 6.7 million hectaresbetween 1990 and 2010 to reach 20.1 million hectares – equivalentto 11 percent of the land area and 22 percent of the total forest area(Figure 2.17). In Myanmar and Viet Nam the area of conservationforest has almost tripled since 1990. In Cambodia, Lao PDR andThailand increases have been between 20 and 44 percent.13 World database on protected areas (http://www.wdpa.org/Default.aspx)14 Area containing predominantly unmodified natural systems, managed to ensure longtermprotection and maintenance of biological diversity, while providing at the same time asustainable flow of natural products and services to meet community needs (http://www.unepwcmc.org/protected_areas/categories/index.html).42

STATUS AND TRENDS IN FORESTS AND FORESTRYPrimary forestareas are fallingalthough dataquality is lowIn contrast to the increased area of conservation forest, the areaof primary forest in the subregion has continued to fall, althoughno changes have been reported in Lao PDR, Myanmar or Thailandsince 1990. In Viet Nam, the area of primary forest has fallen to80 000 hectares while only 322 000 hectares remain in Cambodia.The subregional pattern of forest cover change shows that apartfrom less accessible and mostly mountainous areas, most of theremaining forest cover is affected by change. Furthermore, areasof change frequently overlap with protected areas and nationalparks (Stibig et al. 2007).Figure 2.17. Change in the extent of forest designated for conservation in GMScountries, 1990-2010Source: FAO (2010).Many protectedareas exist onlyon paperThe World Parks Congress in 2003 highlighted concerns that manyprotected areas exist only on paper, especially in developingnations, and that costs associated with protected areas are oftenborne locally while benefits accrue globally (IUCN 2003). Globalfinancing for conservation of forests in the humid tropics isparticularly necessary given the low level of domestic benefitsthat are generally available (Chomitz and Kumari 1998). Accordingto IUCN, existing global protected areas suffer an annual fundinggap of around US$25 billion and while conservation funds arepromoted they are often inaccessible or misdirected (IUCN 2003).The situation in the lower Mekong countries is outlined in Box2.10....designaon is only the first step. If protected areasare to be effecve in fulfilling their aims of biodiversityconservaon, environmental management and theprotecon of the world’s cultural heritage, they mustalso be well managed (WWF 2004)43

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportBox 2.10. Protected areas and investment in the lower Mekong countriesProtected area systems have expanded rapidly in the lower Mekong countries.Including locally and provincially managed areas, they cover close to a fifth of thetotal land area in Cambodia, Lao PDR and Thailand (Table 2.7). Protected areas aremostly located in forested uplands and have expanded from nothing over the pastthree decades. It was estimated that by 2005, around 53 percent of natural forestsin the lower Mekong countries would be within protected areas (Table 2.7).Table 2.7. Forests and protected areas in the lower Mekong Basin (2003)Cambodia Lao PDR Thailand Viet NamProtected areas as a % of land area 21 21 19 8Estimate of forests in existing andproposed protected areas as a % oftotal forest40 39 65 26In general, domestic investment in protected areas, especially relating to recurrentcosts associated with staff and maintenance, has increased as new areas havebeen established. Overseas funding increased rapidly between 1990 and 2000but fell off subsequently. In particular, international aid in Cambodia and LaoPDR dropped steeply in the second half of the 1990s due to political instability, alack of progress and resource degradation. In Viet Nam, government funding forprotected areas increased through the 1990s as 30 new areas were established.In contrast to government support, direct private sector investment in protectedareas has been minimal and generally associated with tourism and hydropowerschemes.Despite their extent, limited capacity and relaxed enforcement at the communitylevel mean that most protected areas in the lower Mekong Basin are multipleuseareas. The collection of NWFPs is eroding biodiversity values and most of themain trade routes from Lao PDR and Cambodia are directly linked to protectedareas. Additionally, encroachment by local communities and commercial interestsis reducing the size of protected areas. Despite many small-scale logginginfringements within protected areas, however, and notwithstanding a number ofserious exceptions, destruction within protected areas has been less than that insurrounding landscapes in the lower Mekong countries.Source: ICEM (2003).Designationdoes not meanprotectionThe importanceof local people isunresolvedThe lack of financing for protected areas has been highlighted bymany studies conducted around the world (WWF 2004; ACB 2008;Lacerda et al. 2005). In Myanmar, for example, 45 protected areascovering over 3.5 million hectares or 5.4 percent of the total landarea had been established by 2003. Only 22, however, have activemanagement with wardens and staff present (Thaung 2009).Globally, protected area management issues related to legaldefinition, demarcation and biodiversity assessment are mostlysatisfactorily addressed while measures related to people –both local communities and visitors – management planning,monitoring and evaluation, budgeting and awareness are44

STATUS AND TRENDS IN FORESTS AND FORESTRYless effective (WWF 2004). Key threats include poaching,encroachment and logging and unsustainable collection ofNWFPs and biodiversity condition is most strongly correlated withmonitoring and evaluation; resource management; staff numbersand legal status (WWF 2004). Biodiversity condition is stronglyrelated to law enforcement, control of access and monitoring andevaluation (WWF 2007).The importanceof local people isunresolvedState commitmentis essential foreffective protectedarea managementA consistently challenging issue in protected area managementis the inclusion of local people in management decisions andaligning livelihood improvement activities with conservationobjectives (WWF 2004). In Thailand, 8.1 million hectares or 16percent of the total land area is included in the protected areasystem (Jantakad and Gilmour cited in Lakanavichian 2006).Management is complicated by the presence of forest-dependentpeople and illegal loggers and it is argued that involvement of localpeople and other agents in management is necessary for effectiveconservation and sustainable management (Lakanavichian 2006).Survey work has shown, however, that protected area effectivenessdeclines with the extent to which people have access and thatparticipation of local and indigenous people in managementdecisions does not necessarily increase the effectiveness ofprotected area management (WWF 2004).In Lao PDR, Cambodia and Viet Nam, protected areas adjacentto areas of development are under serious threat of biodiversityand resource loss (Corbett 2008). Timber, wildlife and NWFPsare being severely overharvested causing damage to habitatsand environmental services and also undermining local people’ssubsistence. The Song Thanh Nature Reserve in Central Viet Nam,Dong Hua Sao National Protected Area in southern Lao PDR andPeam Krasop Wildlife Sanctuary in southwestern Cambodia are allthreatened – mainly by external commercial interests supplyingdistant markets. Degradation is resulting from logging, conversionto plantations, mining, unmanaged harvesting of NWFPs andorganized hunting of wildlife for medicines, skins and meat. Thetrend is likely to worsen as investments close to the reservessuch as roads, dams and electrification schemes expand in theabsence of additional resource management, law enforcementand governance capacity. Similar problems in the Kulen PromtepWildlife Sanctuary in Cambodia are outlined in Box 2.11.Box 2.11. Protected area management in CambodiaA long list of threats faces protected areas in Cambodia: illegal logging;encroachment; poaching; shifting cultivation; infrastructure development; illegalfishing; mining; and harvesting of NWFPs. Increased access, and particularly roaddevelopment, is a major driver behind land encroachment in protected areas. Thiscan be seen in the largest protected area in Cambodia, Kulen Promtep WildlifeSanctuary, which is located in the region of the southern GMS economic corridor(Figure 2.18).45

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportKey factors contributing to the pressures affecting protected areas in Cambodiainclude increasing national and regional demand for timber and inadequatelaw enforcement combined with a lack of alternative sources of income for localpeople. Illegal logging and wildlife poaching are the most pervasive threats acrossthe protected area system. Analysis of forest cover in protected areas adjacentto Thailand has also shown increasingly rapid deforestation dating back to theThai logging ban in 1989 when demand for timber from neighbouring countriesincreased sharply.*Figure 2.18. Satellite image showing forestclearing associated with a road in northwestKulen Promtep Wildlife SanctuaryKey: Darker greens indicate continuous forest coverand light green indicates disturbed forest or othersecondary vegetation. Purple and pink indicateareas with decreasing vegetation cover and whiteareas are bare earth, concrete, or rooftops.At present, protectedareas lack managementplans, objectives andzonation and many havenot been demarcated.There is also a general lackof financial and humanresources at all levelsand communication andinfrastructure need tobe improved. Increasingcooperation betweenprotected area managers,local communities andother partners andimproved communicationbetween protectedarea staff and nationalauthorities provide somecause for optimism,although underlyingdrivers of change alsoneed to be addressed.Source: Lacerda et al. (2005) except: * Rapid forest loss across the Thailand-Cambodia border. World Resources Institute, http://images.wri.org/treecoverchange/treecoverchange_kh.jpgFuturedevelopmentswill have multipleeffectsIt has been suggested that the biodiversity crisis could be lesssevere than expected due to forest regrowth in abandonedupland areas where people have moved out to follow morelucrative pursuits (ENS 2009). The fraction of original biodiversitythat secondary forest will sustain is disputed, but the role forprotecting and expanding fragments of old growth forest is likelyto increase greatly in the future. In spite of many weaknesses inthe global protected area system, WWF (2004) reported that thebiodiversity condition in 200 surveyed forest protected areas in37 countries is perceived as good, even in areas that could bedescribed as ‘paper parks’.46

STATUS AND TRENDS IN FORESTS AND FORESTRYWildlife depletionis an immediatethreat – loggingand encroachmentremain a chronicthreatWhether the issues that beset conservation initiatives in thesubregion can be overcome will have important effects not onlyon the forest environment, but also on timber supply and poverty.Encroachment and logging are only likely to be resolved in thelong term if monitoring and law enforcement efforts are increased.More difficult to address will be wildlife depletion. The variabilityand complexity of wildlife trade chains, the porosity of bordersand difficulty in guarding large areas against the threat of wildliferemoval makes wildlife depletion difficult to address (Traffic 2008).Governance improvements and increased sustainable resourcemanagement efforts along with law enforcement are the mainmeans suggested to tackle the decline in wildlife (Traffic 2008).In particular, efforts need to be made to raise awareness amongurban consumers and more wealthy groups.2.4.2. Forests and climate changeForests areintimately involvedin climate changeClimate changewill affect forestryand forestry couldplay a role inmitigationForests are globally important reservoirs, sources and sinks ofcarbon. During the 1990s deforestation and forest degradationaccounted for 20 percent of global anthropogenic greenhouse gasemissions (Gullison et al. 2007). Growing trees and forests absorbcarbon dioxide and provide a means to mitigate climate change.When sustainably managed, forests also supply products for whichlife cycle emissions of greenhouse gases are considerably lowerthan alternatives including steel, aluminium, bricks, concrete,plastics and fossil fuels. Additionally, forests provide services,such as coastal and watershed protection, which are important inadapting to climate change effects such as increased frequencyand intensity of floods, storms and droughts. Forests will also bedirectly affected by climate change. In particular, reduced rainfalland increased temperatures are likely to result in forest drying andincreased frequency of fire, diseases and pathogens. Phenologicalpatterns and relative competitiveness of species within habitatsare also likely to change, with concomitant effects on ecosystemfunctioning (see Section 2.1.4).In Southeast Asia, it is expected that climate change will resultin decreased freshwater availability, increased risk of flooding incoastal and deltaic areas and increased occurrence of extremerains and associated landslides (Cruz et al. 2007; Box 2.12). Thepotential impacts of climate change – and the impacts of responsesto climate change – on forestry in Southeast Asia are considerable.Substantial benefits could accrue if the subregion’s forestry sectorcan be positioned as a feasible mechanism to achieve climatechange-related goals. For this to occur, however, many of thesocial and political issues currently constraining expansion of SFMwill need to be overcome.47

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportBox 2.12. The nature of climate change impacts in AsiaOver past decades changes have been observed in extreme events and climateanomalies in Southeast Asia (Cruz et al. 2007). These have included increasedoccurrence of extreme rains causing flash floods in Viet Nam; landslides and floodsin the Philippines in 1990 and 2004; and floods in Cambodia in 2000. Droughts havenormally been associated with El Ninõ years in Myanmar, Lao PDR, Philippines,Indonesia and Viet Nam. The droughts in 1997/1998 caused massive crop failures,water shortages and forest fires in various parts of the Philippines, Lao PDR andIndonesia.In the future, climate change is expected to have a range of effects and is projectedto impinge on the sustainable development of most developing countries ofAsia, as it compounds the pressures on natural resources and the environmentassociated with rapid urbanization, industrialization and economic development.Most regional climate change studies project changes in the seasonal distributionof rainfall, with drier and/or longer dry seasons and shorter, more intense wetseasons (Johnston et al 2009). In Southeast Asia, little change in annual rainfall isforeseen until 2040 (Cruz et al. 2007). An increase in occurrence of extreme weatherincluding heat waves and precipitation events is, however, predicted. Increases intropical cyclone intensities by 10 to 20 percent are expected while temperature isprojected to increase by 0.7-0.9 o C (Cruz et al. 2007).Changes in climate are expected to increase the incidence of fire, forest diebackand spread of pests, pathogens and invasive species, and are also likely to directlyaffect tree physiology, forest growth and biodiversity (SLU 2008; Cruz et al. 2007).Increases in extreme rainfall events are likely to directly increase the frequencyof landslides in sloping areas (Rosenfeld 1999). At the same time, increased roaddevelopment and rising levels of human activity in forest areas are likely to increasethe incidence of fire and may result in increasing cycles of forest devastation(Rowell and Moore 2000). Maintenance of forest health and vitality may, therefore,become of key importance in relation to slope protection as well as other climatechange-related goals (Seppälä et al. 2009; Dolidon et al. 2009).Source: Cruz et al. (2007) and IPCC (2007b).Roles of forestry in climate change mitigationDeforestation andforest degradationaccount for largereleases of CO 2intothe atmosphereOn a global scale, land-use change and forestry – mostlydeforestation – are estimated to account for 17.4 percent ofgreenhouse gas emissions while transport accounts for only 13.1percent (IPCC 2007b). Degradation of forest through logging, fire,disease and pathogen attack also increase CO 2emissions, whichmay be permanent. Carbon is stored in the leaves, branches,trunks and roots of trees and also in forest soils. Old growthtropical forests store between 120 to 400 tonnes of carbon perhectare, i.e. 440-1 467 tonnes CO 2equivalent 15 (Laurance 2007b).15 One tonne of carbon is equivalent to 3.67 tonnes of CO 2.48

STATUS AND TRENDS IN FORESTS AND FORESTRYAssuming a typical soil carbon density of 60 kg/m 3 , forests on peatswamps contain 600 tonnes of carbon in the top one metre of soil,which also has to be taken into account. A proportion of this isreleased into the atmosphere following drainage, deforestationand burning. In relation, peatlands make up 12 percent of the landarea in Southeast Asia and are estimated to account for 25 percentof current deforestation (Hooijer et al. 2006).Deforestationconstitutes a majorsource of globalCO 2emissionsIt has been estimated that the amount of carbon presently lockedup in forest ecosystems exceeds the total amount of carbon in theatmosphere (Stern 2006). Figure 2.19 shows sources of emissionsfrom land-use change in tropical countries, which are the sourceof over 98 percent of global emissions from land-use change.Deforestation is dominant although emissions associated withforest products and slash 16 from harvesting and management– potentially equivalent to forest degradation – also play animportant role.Figure 2.19. Annual emissions from land use change in tropical regions by sourcefor the 1990sSource: Based on data from Houghton (2003).Southeast Asia isa huge emitter ofgreenhouse gasesfrom land-usechangeFigure 2.20 shows net annual transfer of carbon into theatmosphere from land-use change for global tropical regions.As a result of reductions in carbon fluxes in South and CentralAmerica in the 1990s, South and Southeast Asia became thelargest source of carbon from land-use change in 2002 (Houghton2008). Carbon flux from the United States is shown to demonstratetrend reductions that have occurred due to transitions awayfrom agricultural expansion since the beginning of the twentiethcentury.16 Branches, stumps and leaves, etc. left after harvesting or thinning.49

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportFigure 2.20. Annual net flux of carbon to the atmosphere from land use changein global regions: 1850-2005Source: Based on data from Houghton (2003)Global agreementshave so far beenunsuccessful inforest-relatedclimate changemitigationThe cost ofreducing emissionsfrom deforestationand degradationappears lowBecause benefits associated with climate change mitigationare accrued internationally while costs are borne nationallyand locally, global mechanisms to market the climate changemitigation values of forests are being further developed. TheUnited Nations Framework Convention on Climate Change(UNFCCC) recognizes the importance of land use and land-usechange (LULUCF) activities in stabilizing atmospheric greenhousegas concentrations and the Kyoto Protocol makes provisionfor associated activities. At present, only afforestation andreforestation (A/R) activities qualify under the Clean DevelopmentMechanism (CDM) of the Kyoto Protocol, which aims to reduceemissions in developing countries by funnelling payments fromindustrialized countries to help meet their emissions targets. 17Only a handful of projects, have, however, successfully tapped CDMfunds. More widespread implementation has been curtailed bymethodological complexities related to leakage, permanence,additionality and monitoring (see Box 2.13). The low priceof temporary credits available for A/R activities and the smallproportion of revenue from CDM in relation to other revenuesfrom A/R have also been an obstruction (Neeff and Henders 2007).Apart from A/R activities, it has been estimated that the cost ofreducing emissions from deforestation and degradation will be lowin comparison with current carbon credit prices (Chomitz 2007).The initial annual opportunity cost of forest protection in eightcountries accounting for 70 percent of emissions from land usehas been estimated at US$5 billion (Stern 2006). As well as REDD,options open for consideration in a new climate change agreementinclude afforestation, reforestation and enhancement of sinks17 Emissions from deforestation were omitted from CDM projects primarily because of therisk of leakage (Stern 2006).50

STATUS AND TRENDS IN FORESTS AND FORESTRYthrough forest restoration, and substitution of forest products forelectricity and fuel (Robledo and Blaser 2008). Greater inclusion offorestry in a post-Kyoto agreement is greatly anticipated, althoughmany doubts remain over the expected effectiveness of REDDmechanisms (Lang 2008). In particular, it has been suggestedthat addressing deforestation and its “deeply-entrenched socialcauses” may prove to be more expensive than alternative waysof reducing emissions of greenhouse gases (Raffensperger 2007).The failure to reach encompassing agreement on an internationalframework on REDD at the United Nations Climate Conferencein Copenhagen in December 2009 (COP 15) suggests that thereis still some way to go before forests become an integral part ofinternational climate change mitigation regimes.Voluntary marketshave become themain vehicle forforestry-relatedcarbon tradingDepending onthe mechanismadopted, revenuesfrom REDD may beconsiderableOwing to the difficulty of accessing, or the present unavailability of,internationally regulated ‘compliance’ markets for forest-relatedemissions reductions, voluntary carbon markets have becomethe main vehicle for investment in forestry-related climate changemitigation. Markets have been growing rapidly and in 2007, A/Rand avoided deforestation activities respectively accountedfor 10 percent and 5 percent of over the counter transactions 18(Hamilton et al. 2008). Projects in Asia generated two-fifths ofcredits transacted in the OTC market in 2007 and around 6 percentof these were for forestry-related activities. Prices per tonne ofCO 2equivalent were lower for avoided deforestation than A/Rprojects, although great variation exists (Hamilton et al. 2008). InMarch 2008, Merrill Lynch agreed to pay US$9 million over fouryears to protect 750 000 hectares of forest in Indonesia’s AcehProvince with a proportion of funds going to communities to helpprevent logging (Wall Street Journal 2008). Emissions reductionsof 3.4 million tonnes of CO 2per year are expected and associatedcredits are likely to climb in value if REDD is included in a post-Kyoto international agreement.In anticipation of the inclusion of REDD activities in a post-2012 climate change agreement, most countries in the GMS,are beginning processes to become ‘REDD ready’, i.e., preparingstrategies and frameworks that will meet expected requirementsof global REDD markets. 19 Emissions reductions from REDD arelikely to be purchased either on the basis of foregone opportunitycosts or the value of carbon emissions saved (Scholz and Schmidt2008). Table 2.8 shows that Myanmar dominates deforestation inthe GMS, and also has a high rate of loss of growing stock. Viet Nam,on the other hand has made significant gains in forest cover andgrowing stock since 1990. Myanmar’s 32 222 thousand hectaresof forest contain an estimated 3584 million tonnes of carbon in,above and below ground biomass, dead wood and leaf litter. On18 ‘Over the counter’ refers to voluntary transaction made other than through the ChicagoCarbon Exchange, a cap and trade system which organizations join voluntarily.19 Lao PDR, Viet Nam, Indonesia and more recently Thailand and Cambodia, have begunpreparations to access post-2012 REDD markets.51

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportaverage, carbon and CO 2equivalent densities are therefore 111and 407 tonnes per hectare. Using a price of $5 per tonne for CO 2emissions reductions, the average value of forest per hectare wouldbe $2039, with all forest carbon worth $65.7bn. In practice, REDDpayments would be related to a baseline rate of deforestationand costs associated with establishing and administering a REDDframework would be subtracted. In countries where governanceis weak, these costs are likely to be considerable.Table 2.8. Deforestation and degradation rates in GMS countries, 2000-2010Forest cover change(000 ha/yr)Growing stock change(million m 3 /yr)Carbon stock inforest (tonnes)*2000-20052005-20102000-20052005-20102010Cambodia -163.0 -127.4 -16.8 -13.2 464Lao PDR -78.0 -78.2 -4.6 -5.6 1 074Myanmar -309.4 -309.6 -14.0 -13.8 1 654Thailand -21.2 14.8 -0.8 0.6 880Viet Nam 270.4 144.0 12.2 3.0 992GMS -301.2 -356.4 -29.0 -24.0 5 064*Includes carbon in living above and below ground biomass.Source: FAO (2010).REDD has manyhurdles toovercomeThe workability of REDD will be depend on a wide range of political,institutional and technical issues. The Stern review emphasizeddefining property rights to forest land and determining rightsand responsibilities of landowners, communities and loggers ineffective forest management (Stern 2006). Institutional capacity islikely to pose a particular challenge in countries where forest coverremains high and governance systems are relatively undeveloped.A range of technical issues will also have to be addressed asdetailed in Box 2.13.Box 2.13. Major technical issues facing REDDScope: While a national-level REDD approach addresses issues with in-countryleakage and allows flexibility through aggregated management of nationalforest resources, projects are likely to be easier to implement and more able toaccommodate within-country heterogeneity.Monitoring: Monitoring deforestation and forest degradation and quantifyingcarbon flows with precision may impose significant costs and internationallyagreed definitions and methodologies need to be developed.Baselines: Setting baselines according to a country’s historic rate of deforestationand degradation, and offering carbon credits for reductions below this reference52

STATUS AND TRENDS IN FORESTS AND FORESTRYlevel, have been widely proposed. This method, however, neglects countriesthat have already lowered their deforestation rate and provides no incentive forcontinued conservation.Leakage: Conservation of one forest can displace deforestation and degradationto another area and although a national-level REDD approach addresses thisissue at the country level, transboundary leakage is likely to occur where adjacentcountries do not participate in REDD. Markets may also turn to alternative productswith greater life cycle CO 2emissions than forest products.Permanence: Emissions reductions from forestry can be reversed throughdeforestation or natural causes such as fire. Non-permanence is particularly likelywhere rights and responsibilities are unclear, as is common in areas with rapiddeforestation. Awarding credits post-facto or holding a proportion of credits asa buffer can help to manage such risks. Reductions in the value of credits are,however, likely to result.Source: Adapted from Davis (2008).REDD will facelongstandingbarriers to SFMadoption and mustavoid leakageIn the GMS, many challenges face REDD implementation.Monitoring of forest cover and carbon density to the extent andlevel of accuracy likely to be necessary has never been done atscale. Institutional mechanisms of the type and level of complexityneeded to effectively coordinate REDD activities and distributeassociated benefits do not exist in most GMS countries. Definitionsalso need to be agreed upon to avoid, for example, conversionof natural forest to plantation forest (Sasaki and Putz 2008).Governance issues (see Section 3.6.1) are unlikely to disappearand leakage is likely to occur across borders where countries withremaining forest resources and no REDD mechanism are foundnext to countries implementing REDD (see Brown et al. 2001).Additionally, effort will need to be made to ensure that forestproduct shortages resulting from REDD implementation do notincrease incentives to resume unsustainable extraction or createrising demand for wood substitutes with higher life cycle carbonemissions.Forestry and climate change adaptationForests haveseveral roles to playin climate changeadaptationClimate change in the GMS is expected to result in increasingintensity of floods, storms and droughts as well as sea level rise.Forests have several potential roles in adapting to these threats,especially in relation to coastal protection and reduction oflandslide risk (see Section 2.4.2). Coastal forests and mangroves inparticular, provide protection for people and assets against stormsand cyclones. Although cyclones infrequently make landfall on theeastern side of the Bay of Bengal, Cyclone Nargis was an exceptionand claimed over 84 500 lives (TCG 2008). Mangrove forests inthe Ayeyarwady Delta have been almost completely cleared over53

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportthe past 60 years and the presence of habitation close to the hightide mark increased exposure to the oncoming cyclone and stormsurge. Although mangrove forests cannot prevent inundation, talldense vegetation attenuates wave action and provides structuresfor survivors to cling to. Coastal forests also act as a windbreakin reducing the impact of cyclones and coastal storms on localcommunities.Coastal forests canprotect againststorms andcyclonesForestmanagement willneed to changeto protect forestvaluesThe east coast of Viet Nam is regularly subject to storms andtyphoons from the South China Sea. Every year there are around10 to 15 storms and typhoons which cause damage to houses,buildings and trees and also result in flooding, landslides andwaterlogging. As such, storms and typhoons strongly impacton people’s lives and national production (FSIV 2009). Researchcarried out in Orissa following the super cyclone of 1999 showedthat had mangroves been present around affected villages, loss oflife would have been considerably lower (SANDEE 2007). Duringcyclone Sidr that struck southern Bangladesh in November 2007,the Sunderbans forests also helped to mitigate the effects of thecyclone (FAO 2008a).Adaptation of forest management will also be necessary to avoidreductions in the flow of goods and services, including in relationto climate change mitigation. Climate change could result inincreased incidence of fire, forest diebacks and spread of pests,pathogens and invasive species and could also have direct effectson tree physiology, forest growth and biodiversity (SLU 2008).Assessments of forest health and productivity and institutionalstrengthening are of central importance in managing responsesto climate change impacts. Specific areas of interest are likelyto include maintaining the health and vitality of natural forests,taking future climate change into consideration in planningplantation establishment, developing effective fire suppressionand control systems and implementing measures to control insectand disease outbreaks.2.4.3. Forests and waterForests reduceerosion and helpto maintain waterqualitySustainable management of upland forests and agricultural landsin Southeast Asia is hindered by the combination of steep hillslopes, high intensity rainfall, dry seasons and highly erodiblesoils (Sidle et al. 2006). The role of forests in minimizing erosionand maintaining water quality is of particular importance inhydroelectric schemes where sediment can reduce reservoircapacity and wear down turbine blades; in maintainingaquatic habitats and river navigation by preventing excessivesedimentation and sediment deposition; and in maintenance ofwater quality for drinking (Hamilton 2008). Because fertilizers andpesticides are seldom used in natural forest areas, forests providepreferable land cover to agriculture, habitation and industrialdevelopment, etc., where drinking water supplies are concerned(Hamilton 2008). Riparian buffer zones are particularly important54

STATUS AND TRENDS IN FORESTS AND FORESTRYin preventing sediments and pollutants from entering riversand in stabilizing river banks. Erosion control and entrapmentof sediments is also of relevance in coastal ecosystems whereremoval of mangroves can lead to loss of land, saline intrusion andexposure of coastal populations and assets to increased risk fromcoastal hazards (FAO 2006c, Forbes and Broadhead 2007).Forest cover canreduce landslideriskLandslide risks arerecognized but notalways mitigatedForest-waterrelationships areunclearTrees also play an important role in averting landslides underless extreme conditions, although deep landslides resultingfrom continuous heavy rainfall or earthquakes are unlikely tobe affected (Hamilton 2008). Deep-rooted trees and shrubsstrengthen shallow soil layers and improve drainage, therebyreducing the occurrence of shallow landslides. Transpiration fromextensive tree canopies can also decrease soil water content andreduce landslide risk (Dolidon et al. 2009). Conversion of forests onsloping land reduces rooting strength for up to two decades, evenwith subsequent regeneration, and increases landslide risk (Sidleet al. 2006). Maintenance of forest cover in slip-prone areas whereslopes are greater then 45-55 percent, where slopes are concave,or soils have low cohesion, or are shallow and cover bedrock, isparticularly important (Megahan and King 1985).Land uses that increase surface erosion and slope instability intropical uplands include logging, 20 road and trail constructionand forest conversion, while surface erosion is usually low inundisturbed forest catchments (various sources cited in Sidle et al.2006). Increased occurrence of storms and increased logging andinfrastructure development in sloping areas are likely to raise theincidence of erosion and landslides in the coming years. Althoughregulations preventing logging in riparian zones and on steepslopes are generally included in forest harvesting guidelines, inmost countries they are often not strictly adhered to or enforced.Lack of certainty regarding the precise nature of the hydrologicalfunctions of forests, particularly in relation to flooding anddroughts, has brought some uncertainty to forest protectionfor watershed management (Hamilton 2008; FAO 2005b; Box2.14). Water-related issues have, however, been perhaps themost significant driver of forestry-related policy change in Asia.Landslides following heavy rains in southern Thailand in 1988were linked to deforestation of steep slopes and, as most of thedamage was on land cleared for cropping, a logging ban wassubsequently implemented (see Figure 2.21). Although loggingincreases landslide risk, forest clearance itself and replacementwith vegetation less capable of securing the soil – rubber inparticular – also played an important role (Rao 1988). Althoughlinks between forestry activities and erosion, floods and droughtsare sometimes imprecise, natural disasters are likely to remain akey driver of forest policy in the coming years.20 In steep areas with wet climates, unpaved roads commonly associated with loggingoperations can cause a 10-300-fold increase in landslide erosion rate in forested catchments(Dolidon et al. 2009).55

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportBox 2.14. The technical and political importance of forests and waterThe relationship between forests and water has been variously misunderstood overthe years. Forests have been believed to play roles that upon closer examinationhave been disproven. Importantly, it has been commonly held that firstly, treesand forests increase downstream water yields and secondly, that forest coverprevents flooding. On the basis of collected scientific evidence, however, it is clearthat forests reduce the water yield of catchments rather than increase it (Hamilton2008). Another comprehensive assessment has made a very strong argument thatforest cover has limited effects on catastrophic flooding (FAO 2005b). Nonetheless,forest- and water-related issues have been at the forefront of dramatic policy shiftsin the Asia-Pacific region. For example, the logging bans in Thailand, the Philippinesand in China were largely the result of the understanding that landslides, floodsand droughts were the result of deforestation.Removal of tree cover does accelerate water discharge from a catchment andcan therefore increase the risk of flooding and drought, although the effects areonly significant in small catchments of up to 100 km 2 and with short duration, lowintensity rainfall (Hamilton 2008). At larger scales and lower down in watersheds,the effect of forest cover is negligible. As such, the primary significance of forests inrelation to water is in maintaining water quality through reducing sedimentationand filtering out pollutants and in erosion control and landslide prevention. Inrelation to these roles, forest alteration or conversion generally does not havecatastrophic consequences, but high impact logging and forest removal generallyincrease risk. Additionally, substitution with other vegetation types may providesimilar benefits but the period without vegetation has to be considered and waterrelatedservices may still fall short of those provided by healthy forests (see reviewby Hamilton 2008).Figure 2.21. Landslide scars in Southern Thailand following heavy rains in1988.Source: M. Kashio56

STATUS AND TRENDS IN FORESTS AND FORESTRYProtection forestscover a fifth of thesubregion’s landarea and 10 percentof its forest areaTable 2.9 gives the area of protection forest 21 in GMS countries.Lao PDR, and Viet Nam have significant areas designated forprotection. Thailand, although having banned logging in 1989in response to landslides and flooding, has designated muchof its forest for conservation purposes and a smaller area forprotection. Figure 2.22 shows that the area designated forprotection fell in Lao PDR and rose in Viet Nam. In Viet Nam, forestarea primarily for protection constituted 37 percent of the totalforest area in 2010, having risen rapidly since 1990 in response tothe implementation of national forestry programmes.Table 2.9. Change in area of protection forest in GMS countries 2010Area (000 ha)1990 2000 2010% forest area2010Cambodia 0 6 551 5Lao PDR 11 634 10 310 9 074 58Myanmar 312 1 499 1 352 4Thailand 727 1 081 1 332 7Viet Nam 2 925 5 502 5 131 37GMS 15 589 18 398 17 440 19.3Source: FAO (2010).Figure 2.22. Area of forest designated for protection in GMS countries, 1990-2010Source: FAO (2010).21 Protective functions of forest include climate amelioration, protection from erosion andprotecting coastlines and water resources.57

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportSome of the region’smajor watershedshave been largelydeforestedTable 2.10 shows the varying extents of forest cover and forestcover change in major watersheds in the GMS. The transboundarynature of the Hong, Mekong and Salween systemsmakes management of upper catchments for the provision ofdownstream services a challenging issue. The limited benefits toChina of basin level management of the Mekong are a commonlycited reason for China’s absence from the Mekong RiverCommission (MRC). The Mekong flows from China into Lao PDR,Thailand and Cambodia and reaches the sea in Viet Nam. Theproportion of forest cover is low and much of the original forestcover has been lost. The effects of these losses on downstreampopulations and resources are, however, difficult to quantify andare likely to relate as much to the replacement land use as to theinitial removal of forest.Table 2.10. Forest cover and forest cover change in major watersheds in GMScountriesWatershed Forest cover Percent loss of original forest coverMekong 41.5 69.2Hong (Red River) 43.2 80.0Salween 72.3 43.4Ayeyarwady 56.2 60.9Chao Phraya 77.3 53.4Source: Earthtrends - Watersheds of the world. http://earthtrends.wri.org/maps_spatial/watersheds/asiaocea.phpMountainous LaoPDR is taking stepsto reduce watersheddeforestationLao PDR is the most mountainous country in the subregionwith 87 percent of the land area classified as uplands. Watershedclasses 1, 2 and 3 22 represent 74 percent of the land area, butmuch is highly degraded and in 1993 only 11 percent was coveredby dense forest and 44 percent lacked any forest cover (MAF2004). Over the last 50 years forest cover in Lao watersheds hasfallen from 70 percent to 47 percent. In response, the Ministry ofAgriculture and Forestry (MAF) has adopted a 5-year DevelopmentPlan 2006-2010, which includes targets to identify watershedprotection areas and develop plans for the use and control ofaround 4 million hectares of watersheds (Tong 2009). Plans laidout in the Forestry Strategy 2020 include implementation ofintegrated watershed management, including intensificationof lowland agriculture, introduction of agroforestry in slopingareas and reduction of forest conversion in steep upland areas(Pravongviengkham et al. 2005).22 Watershed classes: 1. Areas with very steep slopes and rugged landforms, commonlyuplands and headwater areas; 2. Areas with steep slopes, usually at higher elevation; 3. Areaswith moderate to steep slopes and less erosive landforms58

STATUS AND TRENDS IN FORESTS AND FORESTRYPayments forwatershed-relatedenvironmentalservices are beingpiloted in Viet NamIn general, schemes to establish payment mechanisms forwatershed-related environmental services have not becomepopular in the GMS. In 2008, however, Viet Nam enunciatedthe Prime Minister’s decision on The Pilot Policy for Payment forForest Environmental Services to provide the foundation for alegal framework for PES from forests. The framework will definethe responsibilities and benefits in relation to water supply forelectricity production, clean water production and ecotourism.PES schemes are being piloted in several provinces to assistdevelopment of legislation, policies and mechanisms. For PESin watersheds to work, however, demonstration of costs andbenefits is required to ensure buyers’ involvement; governmentenforcement and initial funding to finance land-use changeare also necessary (Ha et al. 2008). These issues lie at the heartof watershed management and uncertainties in the linkagesbetween forest management and hydrological benefits (see Box2.15 and also Box 2.8).Box 2.15. Watershed-based payments for environmental services in SoutheastAsiaPES, including watershed management, have not yet taken off in Southeast Asia.Of 30 watershed-related case studies reviewed in Asia, including 13 in Indonesia,11 in the Philippines and one in Viet Nam, all were still at the pilot level. Few ofthese had associated monitoring systems to determine whether the service isactually being produced.Demand among potential environmental service buyers in Asia is limited due tolack of awareness of the concept, lack of successful cases, lack of clear scientificlinkages and resistance to additional taxes or fees. Further impediments includethe highly fragmented nature of land use and ownership in upland areas, the lackof sellers’ bargaining power, high transaction costs, unclear land tenure and lowcapacity of local institutions to act as intermediaries. Additionally, countries in Asiado not have laws and policies supporting PES.If payment schemes for watershed services are to be successful, demand fromwater users must increase and for this to happen, better evidence of the benefitsand of watershed protection and of the effects of payments on the flow of benefitsis needed.Source: Huang and Upadhyaya (2007); Porras et al. (2008).2.5. WOOD AS A SOURCE OF ENERGYEnergy demand inAsia is set to riserapidlyWith global increases in energy consumption and concernsover future oil prices, greenhouse gas emissions and energyimport dependence, changes in the sources from which energywill be derived are expected in coming years. Globally, energyconsumption is projected to increase most rapidly in Asia, where59

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional report60population and economic growth rates are highest (EIA 2007).Wood energy has been receiving increased interest as a meansto reduce fossil fuel consumption and limit greenhouse gasemissions, but has also been used for thousands of years forcooking and heating. In the GMS it remains a primary source ofenergy for these purposes.2.5.1. Extent of wood energy useConsumption ofwoodfuel is fallingbut may increasein response to highenergy pricesDomestic fuelwooduse is falling asstandards of livingincreaseWoodfuel usein the GMS isdecreasingIn GMS countries, wood energy is predominantly used in the formof fuelwood for heating and cooking – primarily in rural areas –while charcoal use is less widespread. Domestic fuelwood use isoften associated with low income and/or poverty and traditionalmodes of use are inconvenient and have negative health effects(Broadhead et al. 2001; Arnold et al. 2003). Increasing availabilityof alternative energy sources and fuel subsidies, as well asimprovements in income and rural to urban migration, havereduced fuelwood use in recent years.Fuelwood is often collected from trees outside of forests andis therefore not generally associated with deforestation, butcommercial collection of fuelwood and wood for charcoal has hadmajor impacts. This is particularly common in mangrove areas dueto the high quality of wood for fuel use. In the Ayeyarwady Delta,mangroves have been cleared to supply Yangon with fuelwoodand charcoal although in other locations, limited areas of foresthave been found capable of providing large quantities of woodfueland meeting the demands of ever-expanding populations (Bensel2008).In 2007, woodfuel consumption in the GMS is estimated to haveamounted to over five times the total industrial roundwoodconsumption. Figure 2.23 shows estimates of total woodfuel 23consumption, demonstrating an overall reduction with timeassociated with rising income and increasing urbanization.Estimates suggest that woodfuel consumption in the GMS willfall by 10 percent between 2010 and 2020 from 87 to 79 millionm 3 . 24 Although data are scarce, it is probable that fuelwood useincreased after the 1998 Asian economic crisis and rose againdue to high oil prices prior to the 2009 economic slowdown. Asimilar situation may result if a global economic slowdown resultsfrom the 2008/2009 crisis. In Myanmar, fuelwood and charcoal arestill very important in domestic and industrial applications and,contrary to estimates shown above, which are based on optimisticGDP growth, total woodfuel consumption is expected to increasein the coming years (Box 2.16).23 ‘Woodfuel’ applies to the sum of wood used directly as fuel (‘fuelwood’) and wood formaking charcoal, both for domestic and industrial purposes.24 The models use driving variables including income, forest cover and the urban proportionof the population (Broadhead et al. 2001). Forecasts were revised for this publication usingupdated GDP purchasing power parity figures (World Bank WDI downloaded 12/07/08).Projections do not take account of the 2009 economic slowdown.

STATUS AND TRENDS IN FORESTS AND FORESTRYFigure 2.23. Woodfuel consumption in GMS countries, 2000-2020Source: FAO calculations based on Broadhead et al. (2001).Much of thepopulation is stillreliant on fuelwoodin Viet NamIn Viet Nam, in 2002, an estimated 80 percent of the populationwas reliant on biomass for cooking needs and biomass is animportant energy source for local industries (FSIV 2009). Viet Namused around 24.5 million tonnes of fuelwood, mainly for cookingand heating in rural areas, but also to bake bricks and tiles, forporcelain production and in food processing. The proportion ofbiomass used in total national energy consumption fell from 73percent in 1990 to 50 percent in 2002, although overall biomassconsumption increased by 13 percent. It is likely that fuelwoodconsumption will fall in the coming years as a result of ruralelectrification, rising income and falling poverty. In more ruraland mountainous areas, however, dependence on fuelwood islikely to remain (FSIV 2009).Box 2.16. Woodfuel and biofuel use in Myanmar.Woodfuel is the most commonly used biofuel in Myanmar and is used mostlyin rural households. Fuelwood consumption is dependent on availability ofsubstitute fuels, standard of living and climate. In northern and eastern parts of thecountry, households often use fuelwood for heating during the cold season. Withrespect to charcoal, mangroves in delta areas, especially in Ayeyarwady Division,have been major sources of production for many years and are under significantthreat. Charcoal production is now restricted and substitute fuels are promoted toprevent deforestation. Moreover, around 4 500 hectares of fuelwood plantationshave been established annually.Estimates of past and future energy consumption by fuel type show a fallingproportion of fuelwood and charcoal, although total consumption is likely toincrease by 14 percent as a result of population growth (Table 2.11).61

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportTo promote biodiesel as an alternative fuel, a large-scale campaign to plantJatropha curcus was introduced in 2005. The five-year plan involves planting 202000 hectares in each state and division, totalling 3 237 000 hectares or almost 5percent of the total land area. The plants are grown along roadsides and aroundhouses, schools and hospitals, as well as on land formerly producing rice and othercrops. A blend of 5-20 percent Jatropha oil with diesel is recommended for lowcost engines in rural areas.Table 2.11. Percentage energy consumption by fueltype, 1990-2020.Type of fuel 1990 2000 2010 2020Crude oil 6.7 8.0 8.0 9.0Natural gas 4.5 6.0 6.0 10.0Coal 0.3 0.4 0.8 1.0Hydropower 1.7 6.0 9.0 13.0Agricultural residues 3.3 4.5 6.8 9.0Fuelwood/charcoal 84.1 76.6 69.4 58.0Other programmesto reduce woodfuelconsumption anddeforestation havebeen implementedincluding promotion ofagri-waste briquettes,distribution of efficientstoves, household useof liquefied petroleumgas (LPG) and naturalgas for brick kilnsand reintroduction ofkerosene. The 2001National Forest Master Plan included targets of establishing 60 750 hectares oflocal wood supply plantations by 2010, followed by 48 600 hectares by 2020, butfunding constraints and low institutional capacity have hindered implementation.Source Tun (2009).2.5.2. Factors affecting future wood energy useThe future ofwood energy isdependent onseveral factors...... energy prices andclimate changemitigation effortsThe extent to which energy will be derived from non-renewables,renewables, bioenergy and also from forests will depend on anumber of factors (FAO 2008b):• The future price of fossil fuels.• The location of the energy source (in relation to nationalenergy dependence).• The carbon efficiency of alternatives and the nature andimplementation of climate change-related policy.• The magnitude of efforts to develop alternative energysupplies.Since the unexpectedly high price peaks of almost US$150/barrelin 2008, oil prices have subsided considerably and the immediacyneeded to find fossil fuel alternatives has faded. The InternationalEnergy Agency (IEA) estimates that prices will fall to around US$60(in 2006 dollars) by 2015 and remain fairly even until 2030. Theremay, however, be sharp increases prior to 2015 due to uncertaintyin production capacity (IEA 2007).62

STATUS AND TRENDS IN FORESTS AND FORESTRY... and energyimport dependenceWood residues arean untapped andpotentially largesource of energyGasificationtechnologies havepotential for ruralpower generationSecond generationbiofuels are stillsome way offWithout highenergy priceswoodfuel use willdepend on policyinterventionDependence on energy imports is another factor likely to increasethe extent to which renewables are promoted. The share of fuelin Asia’s total merchandise imports reached 19.5 percent in 2006,up from 14.7 percent in 2004 (WTO 2004, 2007). In Lao PDR, fueland energy imports rose from 10 to 16 percent of total importsbetween 1996 and 2006, while in Cambodia fuel as a proportionof total merchandise imports dropped from 13 percent in 2000 to10 percent in 2004 (WDI 2010). Thailand has net energy importsthat stand at around half of energy use, while Myanmar and VietNam, are net energy exporters (WDI 2010).Wood energy may also be promoted in relation to carbon efficiency,although it should be noted that bioenergy is only a renewableand sustainable form of energy where harvest is sustainable,taking carbon ‘expenditure’ during production, transportationand processing into account. Many countries possess littleinformation on the amount of biomass that can be collected fromforest operations and have not assessed the potential of woodresidues for energy generation. In natural forests, between 80 and90 percent of total volume could be used for energy generation(FAO 2008b). Most of this material is made up of tree crowns andother rejected pieces that are left in the forest after harvestingoperations.Gasification technology has been suggested as a way to providesmall-scale power delivery for villages and small-scale industry(Knoef 2000). In Cambodia, Abe et al. (2007) found that biomassgasification provided cheaper power than diesel generators,although consistent supply and barriers to growing wood werepotential constraints. The profitability of small-scale plants hasalso been found to be marginal and highly dependent on bothenergy prices and biomass input costs (Knoef 2000; Wu et al.2002). The future of gasification technologies is therefore likely tobe highly reliant on institutional backing.Second generation biofuel technologies are expected to alloweconomically competitive production of liquid biofuels fortransport from cellulosic feedstocks, including agriculturalresidues and wood. It is anticipated that the technology forcommercially competitive production will be available within tento 15 years (Worldwatch Institute 2007). Because of technologicalrequirements and the limited size of the expected markets,cellulosic ethanol production is, however, likely to be limited inthe GMS, particularly before 2020.High fossil fuel prices provide a direct impetus to invest inalternative fuels, whereas environmental and strategic energyissues only act as indirect drivers of change through policyintervention. In the absence of high fossil fuel prices, initiatives toswitch to woodfuel are likely to be financially constrained. Underthese conditions, measures by governments – which have notbeen seen to date – are likely to be the only way that woodfuelwill be promoted.63

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional report2.6. FOREST TENURE AND OWNERSHIPState ownership isgradually recedingTenure securityunderpinssustainabilityTenure shouldsuit managementobjectivesStable and clearallocation of rightsand responsibilitiesis essentialAllocation of forestand land rightshas far reachingimplicationsDevolution offorest and landrights has begunbut...As demands for land and forest products and services increase,it is becoming ever more critical for forest managers to balanceinterests and to integrate or separate activities according to localand national conditions. The long life cycles and non-materialbenefits of forests make tenure a particularly important issue.Although state ownership predominates, patterns are changingin the subregion with particular emphasis on state ownership ofprotected forests and private ownership of production forests.Economic performance in much of the subregion has been strongin recent years and poverty levels have fallen. The contribution offorestry to rural and economic development of the environment ingeneral has, however, often fallen short of potential. This has beenvariously attributed to inequitable distribution of benefits, lackof reinvestment in forestry and inefficient tenure arrangements(RECOFTC 2008; Fraser 2002).The optimum tenure and ownership for different forest types –plantations, protected areas, production forests, etc. – differ inaccordance with the nature of the product/s and the markets thatexist (Landell-Mills and Porras 2002). Natural forests have usuallybeen considered state property but inefficient management,declining growing stock and forest value, and calls for greatersocial and economic justice are resulting in transfer of forestownership to local levels, either as private or community property(FAO 2006b).For governments, the private sector and individuals alike, clearallocation of rights and responsibilities reduces investment risk.With increasing scarcity of land and resources, formalization ofrights and responsibilities has become increasingly necessary.Where tenure has remained unclear, unstable or non-exclusive,suboptimal management has resulted (FAO 2006b).Revisions of ownership and tenure can transfigure forestmanagement, as is happening in China and Viet Nam (Zheng2006; Nguyen 2006). Additionally, allocation of land can haveconsiderable effects on economic efficiency and equity. Landreforms in the late 1940s and early 1950s in Taiwan and Korea,for example, are thought to have been instrumental in reducingincome inequality and stimulating economic growth incomparison with later experiences in Southeast Asia (Jomo 2006).Natural forests in the GMS are predominantly state-owned oradministered and almost all protective plantations are stateowned(Katsigiris et al. 2004; FAO 2006b). In several countries inthe subregion, forest and forest land allocation processes havebeen progressing over the past decade as economic frontiers haveadvanced and societal demands have changed (Edmunds andWollenberg 2003; FAO 2006b). The area of forests where secure64

STATUS AND TRENDS IN FORESTS AND FORESTRYtenure rights for local stakeholders have been devolved remainsextremely small and unclear forest tenure constrains SFM in manycountries in the subregion (FAO 2006b). Only in Viet Nam haverights over significant areas of forest been devolved to individualsand families, communities, the private sector and other economicentities.... state ownershipstill dominatesFigure 2.24 shows the large variation in private forest ownershipbetween GMS countries and the rapid adjustments that have takenplace in Viet Nam where private ownership increased steeply to 24percent – largely as a result of forest land allocation programmes.In 2005, however, only 2.1 percent of forest land was privatelyownedin the GMS, and in Cambodia, Lao PDR and Myanmar, therewas no privately-owned forest land at all. In Thailand, large areasof rubber, pulp and sawlog plantation are also privately-owned,but no natural forest.Figure 2.24. Percentage of forest land privately owned in GMS countries, 1990-2005Source FAO (2010).Thailand’s forestshave beenprotected butlocal rights andproduction havebeen curtailedIn Thailand, all natural forest is state-owned and protectedfollowing the logging ban of 1989. The ban and accompanyingshifts in forest policy towards conservation – in state plantationsas well as natural forests – had significant repercussions on thelivelihoods of people living in protected areas and also on forestproduct production (Lakanavichian 2006). After 18 years ofconsultation, a bill defining the rights of forest-dependent peoplewas passed in 2007 (RFD/DNP 2009). The bill recognizes the rightsof those living within protected areas to collect NWFPs, but not toharvest trees. Those living outside do not have use rights, althougha three-year opportunity to prove legitimate right of access hasbeen granted. Resembling the situation in the Philippines, theargument that villagers’ are unable to manage forests sustainablyis juxtaposed with the belief that local custodianship is necessaryto prevent encroachment, illegal logging and forest degradation.65

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportIn Viet Namforest land hasbeen allocatedto households,individuals andothersIn Viet Nam, significant areas of forest and forest land have beenallocated to households, individuals, communities and the privatesector (FAO 2005a). Public ownership of productive plantations fellfrom 48 percent in 1990 to 27 percent in 2005, while smallholderownership rose from 46 to 64 percent (FAO 2006b). Thecontribution to SFM and livelihoods has generally been positive.Like the Philippines, however, benefits to local groups haveoften been insufficient. Regulatory constraints favouring forestprotection, low forest quality/value, inequitable benefit-sharingarrangements and poor local awareness of rights have beenvariously implicated as detailed in Box 2.17.Box 2.17. The contribution of forest land allocation in Viet Nam to SFM,livelihoods and wood production.Land allocation has been in progress in Viet Nam since 1994 and finalization isplanned for 2010 (MARD 2007). Previously, forest in Viet Nam belonged exclusivelyto the state and was managed by state-owned entities, but more recently foresthas been allocated to households, individuals, communities and the private sector.This has had a range of effects on forest management, income generation andpoverty.Three types of forest – special-use, protection and production forest – wereclassified throughout Viet Nam to create a legal framework for forest management.At the end of 2006, there were 2.2 million hectares of special-use forest, 5.3 millionhectares of protection forest and 5.4 million hectares of production forest. Ofthe total, 10.4 million hectares were natural forest and 2.5 million hectares wereplantation forest (MARD 2007).In early 2005, there were 1.2 million forest landowners; almost all were householdsor individuals. In 2006, 19 percent (1.9 million hectares) of the total natural forestarea and 40 percent of plantation forests were owned by households, individualsand the private sector (Figure 2.25). By September 2007, more than 8 millionhectares of forest land were reported to have been allocated.Figure 2.25. Forest allocation in Viet Nam 01/01/2006The orientation of forest policies in Viet Nam towards protection has affected thecontribution of the forest land allocation programme to poverty alleviation and66

STATUS AND TRENDS IN FORESTS AND FORESTRYincome generation. Allocated forests are also often degraded and inequitablydistributed. Additionally, problems have been encountered with inadequatebenefit-sharing arrangements, poor local awareness of rights, tenure overlaps andlack of monitoring (Nguyen 2006; Nguyen et al. 2008).In general, private and community rights contribute more to livelihoodimprovement and, to a lesser extent, poverty alleviation than organizationalownership. Results from a study in Dak Lak and Hoa Binh provinces show that forestland allocation also has a positive effect on forest resources – primarily in sites withdonor support (Nguyen et al. 2008). In areas of critical environmental importance,state management appears to be more suitable than other tenure arrangements.In less critical protection and production forests, local management may be bettersuited to reducing poverty and achieving SFM (Nguyen 2006).The effects of land allocation and of increased landownership fragmentation onwood production are also receiving attention. Concerns are that wood productiontargets will be missed due to difficulties in establishing extensive areas ofplantation and restriction of efficiencies of scale. Production of timber and sawlogsas opposed to pulp logs may also become more limited due to smallholders’preference for short rotations and quick returns. Models are being piloted tomanage consolidation of land areas but a sound and successful method has yetto emerge.Source: FSIV (2009) except where cited otherwise.A clear landusepolicy isbadly needed inMyanmarIn Lao PDR andCambodia landconcessions areimpacting uponforestryIn Myanmar, all forest, including productive plantation, is stateowned,although communities do have long-term permissionto use forests in some areas. Forests in the country remain inconsiderable flux, however, and a key issue contributing to poorprogress in forestry is the lack of a nationwide land-use policy(Tun 2008). Formulation and implementation of a land-usepolicy is necessary to prevent continuing forest loss and providea foundation for government targets, including attainment ofa permanent forest estate covering 30 percent of the land area.Current government aims to increase agricultural expansion arecoming into conflict with this policy because land use is not definedat the national scale and agricultural development is taking placewithin the permanent forest area. Unless a clear-cut land-use planis endorsed, environmental degradation and reduction of forestproduct production will continue.In Lao PDR and Cambodia, all forest is state-owned and theissuance of land concessions became an important issue forforestry in 2007 and 2008 following huge increases in commoditydemand from China. The situation in Lao PDR led to grantingof concessions being suspended (see Box 2.4) and in Cambodiaclaims of widespread sale of land to foreign investors were made(Global Witness 2009). In both countries, mechanisms to introducegreater involvement of local people in forest management arewarranted as a means of maintaining forest resources, reducingpoverty and increasing rural income.67

STATUS AND TRENDS IN FORESTS AND FORESTRYSFM, valueaddition and forestprotection havebeen commonpolicy themesForestrehabilitation, andlocal rights havealso been targetedForest lawenforcement andclimate changerelatedgoals aremore recent policythrustsIn the GMS, forest policy has been directed towards SFM in almostall countries for over a decade. In more precise terms, this hasmeant reorientation towards reduced exploitation of naturalforests, increased establishment of plantation resources andgreater inclusion of community groups and the private sector inforest management and forestry. Support for the forest productindustry to promote domestic value addition has been anotherkey theme, although excessive wood-processing capacity has alsoled to policies promoting industrial rationalization. Logging banshave been imposed at different stages throughout the past twodecades in Thailand and most recently Cambodia. Log export banshave also been implemented to reduce forest degradation andincrease the availability of timber to domestic wood-processingindustries.Forest rehabilitation has become more frequently included inpolicy declarations, particularly in Viet Nam where plantationdevelopment has become an important policy focus in Indonesiaand Viet Nam. Community involvement has frequently beentargeted and in Lao PDR poverty reduction has become a centraltheme. In Viet Nam, granting of land rights to individuals, familiesand indigenous groups has had a huge influence on the forestrysector in combination with major programmes to increase forestcover, wood product production and rural incomes throughafforestation.Regional and international collaboration to tackle illegal loggingand trade have been strengthened in several countries and effortsare beginning at the regional level to better enforce forest lawand improve forest governance. In Thailand, separation amonginstitutions responsible for conservation and protection hasbeen enacted and private sector involvement in forest productproduction has increased. More recently, protection/conservationof forest resources has received great attention in relation toclimate change mitigation and also adaptation. In the future, theseissues are likely to receive greater consideration as concern growsover climate change and associated adaptation and mitigationgoals.The following sections review major changes in forestry policy in each of the GMScountries over the past decades.2.7.1. CambodiaSustainabilitystands at the centreof Cambodianforest policyFor over a decade, sustainability has been at the centre of forestrypolicy in Cambodia. A log export ban has been in place since1996 and various declarations have been made regarding illegallogging and forest encroachment (Forestry Administration 2009).Policy adopted in 1998 emphasized balancing harvesting withtree planting and forest growth while controlling illegal logging.Specific objectives included planting fast-growing trees forwoodfuel production; controlling timber-processing capacity;69

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportand encouraging modernization of wood-processing equipmentand employment generation. Provision was made for reviewingthe legality of forest concessions, with cancelled concessions tobe classified as protected areas or classified forests (Savet andSokhun 2003; Forestry Administration 2009).In 2002, problemswith the concessionsystem led to policyand institutionalrevisionsIn 2002, failures in the production forest management systemresulted in the suspension of concession licences and forestryin Cambodia embarked upon a period of revision. A new law onforestry was implemented in 2002 and a National Forest PolicyStatement was issued by the Prime Minister. The Department ofForest and Wildlife was reorganized into the Forest Administrationin 2003 to create a single line of authority for forestry at thenational level (Rotha 2009; Forestry Administration 2009). Localforest management has become increasingly important and acommunity forestry subdecree implemented in 2003 resulted in274 community forest areas being identified by 2005 (Rotha 2009).2.7.2. Lao PDRLao forestry hasmoved towardsmore inclusiveapproachesCommunityinvolvement iscentralThe new forestrylaw focuses onforest protectionand regenerationIn the early 1990s, Lao forest policy prioritized protection andconservation of forests, improvement of logging practices andforest industry efficiency and forest rehabilitation. Particularattention was given to protection against shifting cultivation andindiscriminate cutting of forests by rural people (FAO 1993). TheForestry Strategy to the Year 2020 represented a considerablestep forward in guiding the Lao forestry sector towards multipleobjectives with poverty reduction at the forefront (MAF 2004).Targets include:• Improving the quality of forest resources by naturalregeneration and tree planting for protection and livelihoodsupport.• Providing a sustainable flow of forest products for domesticconsumption and household income generation.• Preserving species and habitats.• Conserving environmental values in relation to soil, water andclimate.Particular areas of focus include: land-use planning, villagebasednatural resource management, sustainable harvesting;rationalization of the wood-processing industry; tree planting; lawenforcement and participation to prevent unauthorized activities;and protection of watersheds. Achieving and maintaining 70percent forest cover has been a long-term goal that remains highon the 2020 agenda (see Box 2.18).The forestry law (2007) has also been amended to include thefollowing priorities:• Prevention and control of forest fires, and restriction of shiftingcultivation and illegal logging.• Forest regeneration and forest plantation.70

STATUS AND TRENDS IN FORESTS AND FORESTRYBox 2.18. Forest cover in Lao PDR• Regulation of the allowable extent of natural forest conversionand forest land use.• Provision for a Department of Forest Inspection.In line with the Forestry Law revision, the Department of Forestrywill have new divisions of protection forests and productionforests, while provincial agriculture and forestry offices will haveplanning and forestry inspection sections (Tong 2009).The Ministry of Agriculture and Forestry (MAF) has adopted the 5-year Agricultureand Forestry Development Plan 2006-2010, which includes the target of increasingforest cover from 9 million hectares (42 percent) to 12 million hectares (53 percent)by 2010 (Tong 2009). The FAO global forest resources assessment (FRA) in 2000,reported a figure of 54 percent forest cover for Lao PDR, while in FRA 2005 thefigure for 2005 had jumped to 69.9 percent and a backdated figure of 71.6 percentwas given for 2000. In the latest FRA a figure of 68.2 percent is reported for2010 (FAO 2010). Forest cover determined by the Forest Inventory and PlanningDivision (FIPD) in 2004, and quoted in the Lao PDR Forestry Strategy 2020, was 41.5percent. As the national forest cover target for 2020 is 70 percent, the figures areof considerable importance. Indeed, a figure of 70 percent forest cover is alreadybeing quoted by MAF. 1The differences in figures result from the definitions used: FRA figures for LaoPDR used 10 rather than 20 percent canopy cover, 5 rather that 10 metre heightminimum and bamboo as well as unstocked forest; shifting cultivation areas thatwill be restocked are included. Currently, the FS2020 target is based on FIPD criteria,but there is discussion of revision to coincide with the FAO definition. Additionally,the recent inclusion of rubber as a forest species under the FAO definition willfurther inflate forest cover in Lao PDR given the decision that rubber is to be usedto reach the 70 percent forest cover target (Mekong Maps 2009).1“Minister explains logging regulations” Vientiane Times, 11 July 2008.2.7.3. MyanmarAs pressures haveincreased multiroleforest policy hasbeen introducedFor most of the last century a system of sustainable forestproduction, the Myanmar Selection System (MSS), was in operationin Myanmar and environmental impacts were not severe. The 1894Indian Forest Policy, which focused mainly on sustainable timberproduction, provided guidance until the Myanmar Forest Policy of1995, which has six priority areas (Tun 2009):1. Protection of soil, water, wildlife, biodiversity and environment.2. Sustainability of forest resource use.3. Basic needs of the people for fuel, shelter, food and recreation.4. Efficient use, in a socially and environmentally friendly manner,of the full economic potential of forest resources.5. Participation of people in the conservation and use of forests.6. Public awareness of the vital role of forests in the well-beingand socio-economic development of the nation.71

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportThe Forest MasterPlan emphasizeseconomic andenvironmentalaspects of forestryForestryinstitutionsare becomingincreasinglymilitarizedThe National Forest Master Plan (NFMP) was developed in 2001 forthe period up to 2030. It covers nature conservation, sustainableharvesting of teak, forest protection, environmental conservationand export of value-added wood and NWFPs. Also included areprotection and extension of forests, forest regeneration andrehabilitation, watershed management, law enforcement, andpromotion of fuelwood substitutes (Tun 2009). A CommunityForestry Instruction, issued in 1995, has provided a foundation forabout 600 community forest management agreements (Thaung2008).Recently, an increasing number of military personnel have beenappointed to Forest Department posts. There has also beenincreasing centralization despite a statement in forest policyto encourage public participation (Thaung 2008). There is,however, evidence of the emergence of pluralistic institutionalarrangements. For example, the Forest Products Joint VentureCorporation was established to expand manufacturing anddistribution of forest products (Thaung 2008).2.7.4. ThailandThai forest policyemphasizesenvironmentalprotectionLocal participationin forestmanagementcontinues to divideopinionPeople-centreddevelopment isgaining nationallevel importanceThailand’s first comprehensive National Forest Policy wasestablished in 1985 (RFD/DNP 2009). The policy is based aroundthe principles of SFM and emphasizes environmental protection.The 40 percent national forest cover target was originally dividedinto 15 percent for protection and conservation and 25 percentfor production. After catastrophic flooding in Southern Thailandin 1998, however, a logging ban was imposed and the ratio ofconservation to production was reversed (Ongprasert 2008).In 1991, the Royal Forest Department began developing acommunity forestry bill to allow involvement of local communitiesin managing forests in and around national reserves. The bill madelittle progress despite being redrafted several times. Conflicthas arisen between ‘the people’s movement’ which emphasizescommunal rights and the ‘dark green movement’ which objects tocommunity forest establishment in protected areas (Ongprasert2008). A decision was made that community forestry would beallowed where communities could prove that they settled before1993 and could demonstrate ability to protect forests. The bill wasapproved by Parliament in 2007 and is awaiting royal approvalbefore enactment.Thailand’s forest-related policy, legislation and institutionalframework distinguished between protection and productionroles of forests. In 2002, the Royal Forest Department was dividedinto three departments: the Royal Forest Department (responsiblefor forests outside protected areas), the National Park, Wildlife andPlant Conservation Department and the Department of Marineand Coastal Resources. Decentralization and public participation inpolicy, planning and management of natural resources in Thailand72

STATUS AND TRENDS IN FORESTS AND FORESTRYis still rather limited. After the coup d’etat in 2006, however, a newconstitution was drafted containing provisions for the promotionof public participation in environmental conservation andsustainable natural resource use (Ongprasert 2008).2.7.5. Viet NamThe basis for forestmanagementin Viet Nam hasshifted and majorprogrammes havebeen implementedForestry hasbeen granted anenlarged nationalroleThe vision forforestry is broad inscopeSince nationwide introduction of free market principles in 1986,substantial changes have taken place in the forestry sector inViet Nam, including the reorganization of state forest enterprises,changes in forest ownership and growth in wood product exports.Forests have been classified into three types – special-use, 25protection and production and state forest enterprises are beingdissolved or rearranged into companies and forest managementboards. Legislation was issued during the past decade to allocateland to households and individuals for sustainable forestproduction, conservation of flora and fauna and forest protection(Coi 2009). Several major programmes have been implementedincluding the Five Million Hectare Reforestation Program, whichhas contributed greatly to national forest restoration since 1998.Forestry has moved towards greater participation, improvedforest protection, increased plantation establishment andincreased timber processing, both for domestic demand andexport. Protection of existing natural forest, greening areas ofbare land, planting of production forest and sustainable useof forest resources are expected to increase the importance offorestry as an economic sector while contributing to income,livelihood improvement and poverty reduction (FSIV 2009).In 2007, the government approved the Viet Nam ForestryDevelopment Strategy 2006-2020. The strategy comprises fiveprogrammes (MARD 2007):1. Sustainable forest management and development programme2. Programme on forest protection, biodiversity conservation andenvironmental service development3. Forest product processing and trade programme4. Programme on research, education, training and forestryextension5. Programme on renovating forest sector institutions, policy,planning and monitoringViet Nam, although retaining only small areas of natural forests,has also become a leader in developing REDD readiness andsignificant revenues could be secured by the forestry sector ifinternational agreement and associated funding are realized. Thefact that only one forestry-related CDM project exists in Viet Namdespite national focus on afforestation and reforestation does,however, suggest that expectations should remain conservative.25 Conservation forests.73

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional report2.8. PROGRESS TOWARDS SUSTAINABLE FORESTMANAGEMENTProgress towardsSFM may bemeasuredaccording to sevenelementsTrends arepredominantlynegative in thesubregion as awholeForest resources, the products and services they provide and thesocial, institutional and business structures that surround themare transforming at varying rates across Southeast Asia. Demandsfrom different groups across society are impacting forests andforestry in various ways and are also influencing the capability ofthe forestry sector to meet future demands. To measure progresstowards SFM 26 seven thematic elements derived from regionaland international processes on criteria and indicators for SFMhave been suggested by FAO (2005a):1. Extent of forest resources – maintaining significant forest coverand stocking.2. Biological diversity – its conservation and management.3. Forest health and vitality – reducing fires, pollution, invasivespecies, pests and diseases.4. Productive functions – maintaining production of wood andNWFPs.5. Protective functions – in relation to soil, hydrological andaquatic systems.6. Socio-economic functions – the support provided by forests tothe economy and to society.7. Legal, policy and institutional framework – to support the abovethemes.In the GMS, key shifts between 2000 and 2010 included a decreasein total forest area of 329 000 hectares/year and a reduction of24 000 hectares/year in the area of primary forest (Figure 2.26).These trends were partly countered by an increase in plantedforest area of 274 000 hectares/year. Forest area designated forconservation increased by 241 000 hectares/year between 2000and 2010, while forest designated for protection fell by 96 000hectares/year. The area of forest designated for production fellby 385 000 hectares/year. These trends indicate a gradual shiftfrom production of forest products to production of servicestogether with a reduction in the area of forest, and natural forestin particular. The area of other wooded land increased by 23 000hectares between 2000 and 2010, although this has been at theexpense of total forest area.26 “Sustainable forest management aims to ensure that the goods and services derived fromthe forest meet present-day needs while at the same time securing their continued availabilityand contribution to long-term development.” (http://www.fao.org/forestry/sfm/en/)74

STATUS AND TRENDS IN FORESTS AND FORESTRYNotes: Growing stock in million m 3 , carbon stock in million tonnes; also see Table 2.13 notes.Sources: FAO (2005a); FAO (2010).Figure 2.26. Trends towards sustainable forest management in the GMS -changes in forest resources 1990-2005Balance betweenelements isessential forsustainabilityForest resourceshave declined inmost countriesProductivefunctions of forestsare fallingComparative analysis of trends in social, environmental andeconomic aspects of forestry provides an indication of balance –and degree of sustainability – in sector development. Negative andunbalanced trends show a lack of SFM whereas, predominantlypositive trends, together with some negative responses, indicateshifting sector structure. Trends for individual countries between2000 and 2010 are given in Table 2.13. Clearly positive trends,shown in green, include Viet Nam’s performance against a numberof variables, although areas of primary and protection forest arefalling. Thailand’s positive performance also stands out while inCambodia there are few positive trends.Changes in the extent of forest resources, defined by forest area,area of other wooded land, growing stock and carbon stock, havebeen predominantly negative in all countries except Viet Nam.Elements related to biological diversity, including area of primaryforest and total forest area, excluding the area of planted forests,show mixed trends in all countries. Additionally, it should berecognized that although the area designated as conservationforest has been increasing, the management of conservationforests has often been poor as detailed in Section 2.4.1.Trends in the productive functions of forest resources have to becarefully considered given the tendency towards forest clearancein the subregion and the low rate of implementation of forestmanagement for sustained yield, or of SFM. In Myanmar, the area ofproductive plantations and total removals has increased, althoughthe area of forest designated for production has also fallen. In LaoPDR and Viet Nam, the area of production forest and of productiveplantations has increased but removals have apparently fallen. Inother countries, trends are predominantly negative with removalsin particular falling steeply.75

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportProtectivefunctions andprivate ownershiptrends are mixedThe area of forest designated for protection increased inCambodia and Thailand, although in both countries protectionforests constitute a small proportion of the total forest area. Inall other countries the area of forests designated for protectionis falling. Surprisingly, given trends towards devolution of forestmanagement, areas of forest under private ownership have onlyincreased in Viet Nam and Thailand, while in other countries thereis either no private forest land or the area is falling.76

STATUS AND TRENDS IN FORESTS AND FORESTRYTable 2.13. Trends towards SFM in Southeast Asia 2000-2010Sources: FAO (2005a); FAO (2010).77

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportThe proportionof natural forestunder SFM remainslowSeveral factorsconstrainexpansion of SFMTransitions mayyet occur, however,and are beginningin some countriesThe International Tropical Timber Organization’s Status oftropical forest management 2005 (ITTO 2006) also assessedprogress towards SFM in tropical timber-producing countriesand concluded that significant progress has been made since1988, particularly in relation to designation of permanent forestestate, issuance of related policy and coverage by managementplans. The proportion of natural production forest under SFM,however, remains very low and unevenly distributed. In Asia, forexample, only about 12 percent of the natural permanent forestestate is estimated to be under SFM and only 5 percent of thenatural production permanent forest estate is certified as beingsustainably managed. In the GMS, forest management certificationhas been very slow to progress and only 99 000 hectares had beencertified under the FSC scheme as detailed in Box 2.19.The contribution that has been made towards SFM by designationof permanent forest estate and other measures should be viewedin the light of ITTO’s lessons learned. In this respect ITTO foundthat:• SFM for the production of timber is less profitable to thevarious parties involved than other possible ways of using theland.• External financial and technical support is often required toestablish SFM and an adequate and reliable global systemfor funding the additional costs involved in putting SFM intopractice is lacking.• Long-term government resolve and credible arrangementsfor tenure are necessary.• Discussing illegal logging and trade is not enough andimproved laws and vigorous law enforcement are needed.• Efforts are needed to confront the almost universal lack ofresources needed to manage tropical forest properly – staff,equipment, vehicles, facilities, etc.• Information on the extent of resources and state ofmanagement needs to be improved.These points outline the general picture in which continued forestloss is explained in terms of the surrounding economic, policyand institutional conditions. As such, designation of forest to oneclass or another is unlikely to be sufficient where political resolve,resources, law enforcement and other prerequisites are lacking.National- and global-scale statistics are, however, limiting and pasttrends should perhaps not be considered of central importance inpredicting the future. In this sense, the general picture must beseen as one of a system in transition. In many countries, forestmanagement is transforming alongside society through increasedmigration and infrastructural developments, shifting sectoralcommitments and changing levels of demand, interwoven withevolving policy processes – both within forestry and outside. Insome countries – Viet Nam in particular – vigorous programmaticapproaches are helping to rejuvenate the sector and there are also78

STATUS AND TRENDS IN FORESTS AND FORESTRYisolated pockets of change, in Thailand for example (Leblond2008). More general advances are likely to depend on a host offactors including political will, financing, institutional capacityand policy implementation, tenure security and attenuation ofdemands on forests and forest land.Box 2.19. Certification of forest management in the GMSForest management certification, although not fully identified with SFM, providesa means of assessing progress in forest management and the scheme run by theForest Stewardship Council is of global prominence. FSC certification has grownrapidly in the Asia-Pacific region over the last decade although correspondingexpansion in the GMS region has been minimal (Table 2.14). Although only10,000 hectares of forest are currently certified by FSC in Viet Nam, the nationalforestry strategy announces plans to extend certification to at least 30 percent ofproduction forest areas 2020 (~1.5 m ha; MARD 2007).Table 2.14. FSC-certified forest area in the GMS by forest type (000 ha)NaturalSemi-natural andmixed plantation& natural forestPlantationTOTALNumber ofcertificates(2008)Lao PDR 57 0 0 57 2Viet Nam 0 0 10 10 1Thailand 0 0 6 6 4TOTAL 1 116 21 51 1 188 25Source: FSC data received December 2008.N.B. As of June 2010, the total area in the GMS had risen to 99 thousand hectares as follows:Lao PDR (81 618 ha), Viet Nam (9 782 ha), Thailand (7 643 ha) (FSC 2010).Barriers to forest management certification and to the implementation of SFM inthe Asia-Pacific region in general have been ascribed to a suite of issues operatingat the firm, national and regional level (Gale 2006). Key issues include:• Costs of implementation – auditing costs are high due to the lack of a regionalcertification industry and need for international expertise.• Human resource requirements – implementation of complex criteria requiresprofessional management and well-trained staff who are often not locallyavailable.• A premium for certified wood does not generally exist – within the Asia-Pacificregion especially, consumers are indifferent to legality and sustainability.• Governments have sometimes mobilized against forest certification as apotential threat to business as usual.Gale (2006) also draws attention to the impediment to sustainable developmentimposed by “an Asian model of development dominated by narrow businessgovernmentcoalitions that are actively hostile to [...] sustainable forestmanagement”.79

3KEYKEY DRIVERS OF CHANGEDRIVERS OF CHANGECross-sectoralimpacts continueto dominatechange in forestryPolicy is oftendriven by ‘hiddenhands’Culturaldevelopments alsoaffect forestryAcross most of the GMS, change in forestry is largely driven bywhat happens outside the sector. Increasing populations, risingpurchasing power and increasing levels of international trade areplacing greater demands on forests. Road network development iswidening accessibility and international investment in agricultureis driving new trends in rural economic activity. Extraction offorest products and establishment of agriculture and plantedforests, are altering the extent and species composition of forestsand reshaping the rural landscape. In general, low wages, richsoils, favourable climate and higher prices for agricultural goodsmotivate deforestation (Chomitz 2007). Unclear land tenure andweak governance also exacerbate deforestation, although evenwhere tenure is secure and governance is strong forest clearancemay be the preferred option. Changes in the composition ofeconomies away from rural sectors and development of urbanmiddle classes may, however, drive demand for environmentalservices and away from extractive uses of forests.Mediating current changes, institutional developments are playingan increasing role and sea changes in policy have taken place as aresult of influences that are often paid scant attention in forestry.Environmental shocks and calls for social and economic justice,land allocation processes and the effects of overseas remittancesand off-farm employment are examples of the ‘hidden hands’driving change in forestry in the GMS. These influences have insome cases proven stronger than more direct efforts to promotesustainable management of forests and may provide greaterstimulus for forest transitions in the future.Cultural alterations are also helping to pave the way for changesin forestry and rural development. APFSOS I in 1998 noted theincreasing integration between communities, mass organizations,environmental NGOs, governments and the private sector. In recentyears, global increases in environmental awareness have signalledfurther modification in the stimulus for forest governance reformin the subregion. There is a wide range of developments likely toaffect the direction of progress with SFM. Those identified by ITTOare summarized in Box 3.1.81

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportBox 3.1. Developments that may affect progress with SFMITTO listed the following drivers as k ey influences on progress towards SFM intropical countries:• The expansion of planted forests and the use of agricultural tree crops fortimber may reduce pressure on the natural forest by supplying an increasingproportion of wood production.• Declining timber prices and/or increased prices for agricultural productswould undermine efforts towards SFM.• Greater focus on the management of high-value timber species, anexpanded range of species and/or increased value addition could increasethe profitability of natural forest management.• Climate change could affect forest growth, yield and even survival. Ageneral drying in the tropics could lead to an increased incidence of forestfire and drought-related changes to forest structure. Conversely, increasedrainfall could lead to higher rates of forest growth and could also causemore erosion, landslides and flooding.• Greater security of tenure may help to increase sustainable management.• The situation of those peoples who live in or near the forest is unlikely toremain static. If living standards improve and migration to urban centrescontinues, local pressures on forest may decrease.• Decentralization may align forest management more closely with localinterests, but there is no guarantee that this will favour SFM.• As affluence increases, public pressure could induce governments toimprove management and pay more attention to environmental values.• The global community could increase its payments for the globalenvironmental services provided by natural tropical forests, therebyimproving the economic viability of SFM.Source: ITTO (2006).3.1. DEMOGRAPHIC CHANGESBy 2020, anadditional 21million people willjoin the subregion’spopulationThe total population of the GMS in 2010 stood at 227 million.By 2020 an additional 21 million people will join the subregion’spopulation, representing a net growth of 9 percent (UN PopulationDivision 2006). Viet Nam and Thailand account for 69 percent ofthe subregion’s inhabitants but only 36 percent of GMS forest area(Figure 3.1; Table 3.1). Viet Nam is the most densely populatedcountry in the region although, as elsewhere in the subregion,population growth rates have been slowing (Table 3.1).82

KEY DRIVERS OF CHANGEFigure 3.1. Population distribution among GMS countries, 2010Source: UN Population Division (2006).Rural to urbanmigration isacceleratingWith increasing levels of socio-economic development,subsistence-based economic systems are giving way to increasedindustrialization and service delivery while rates of rural to urbanmigration are accelerating. Proportions of populations living inrural areas are relatively even across the GMS, although Cambodiaand Lao PDR remain less urbanised (Table 3.1). In Cambodia,Lao PDR and Viet Nam, the rural population is still expected torise, but at a pace below the rate of overall population growth.Myanmar and Thailand have lower rates of population growthand population densities in rural areas are expected to remainrelatively static up to 2020.Table 3.1 Total population, population density and rural population percentagein the GMS, 1990-2020Population2005(000)Total population Rural populationPopulation Annual changeAnnual changedensity/km 2 (%)(%)(%)1990- 2005-1990- 2005-2005 20202005 2020Cambodia 13 956 79 2.5 1.7 85 2.3 1.2Lao PDR 5 664 25 2.2 1.6 82 1.9 1.2Myanmar 47 967 73 1.2 0.8 73 1.0 -0.2Thailand 63 003 123 1.0 0.5 69 0.8 0.0Viet Nam 85 029 274 1.7 1.2 72 1.0 0.3GMS 215 618 114 1.2 1.0 72 1.1 0.2Asia-Pacific 3 604 129 127 1.4 1.0 61 0.5 -0.1Source: UN Population Division (2006).83

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportRural depopulationwill affect forestryin various waysThe subregion’sworkforce is set toincreaseData in Table 3.1 demonstrate that, notwithstanding therecent economic downturn, rural livelihoods are becoming lessattractive. The long-term effects of rural depopulation on forestryare dependent on a number of factors. Although regrowth andexpansion of forests may occur as people leave the land, lowrural incomes and inappropriate land-tenure systems and policyenvironments may motivate depletion of remaining resources.The current swing towards large-scale commercial agricultureas a driver of forest clearance and the increases in road densityaround the subregion suggest that variations in populationdensity are likely to correlate less and less with forest cover eitherwithin or between countries (Laurance 2007a; DeFries et al. 2010).The effects of trends in overall and rural population growth will,however, be largely mediated by rural development policy andgovernance. Where policy promotes forest conversion or wheregovernance is weak, high rural population densities are likely tohave detrimental effects on forest resources. Exceptions, wherehigh population densities stimulate investment in forest resourceshave, however, been reported (Bensel 2008).Figure 3.2 shows age distribution in the GMS in 2005, togetherwith forecasts for 2020. The rapid ageing trend will result in a 15percent increase in the non-working population (below 14 orabove 60 years) by 2020. At the same time, a 19 percent increasein the working population is expected. The transition to a morebalanced age structure is likely to increase demand on forestresources in unison with the effects of overall population growth.Whether new demands favour forest products or forest serviceswill determine the impacts on forests. Growing environmentalawareness among the current younger generation may precipitateincreased movement towards forest protection. This opportunitywill, however, also depend on economic growth and the provisionof alternative sources of income. The quality of policies andinstitutions and governance will also play a determining role.Figure 3.2. Age distribution in GMS countries, 2005 and 2020Source: UN Population Division (2006).84

KEY DRIVERS OF CHANGEOutmigration andoverseas work canbenefit forestsReturn to rural areasduring economicrecession has limitedeffects on forestsIn addition to population growth and domestic migration andurbanization, outmigration is increasingly recognized as a driverof change in rural development. The advantages of outmigrationin terms of overseas remittances have been recognized by severalGMS economies, particularly Thailand and, more recently, VietNam (IOM 2003). Thailand has also become a magnet for migrantsfrom neighbouring countries, including seasonal workers fromLao PDR and workers with poor prospects in their own country,particularly Myanmar citizens. Several effects can immediately beforeseen and anecdotal evidence exists for each. Firstly, capacityto manage forests in countries of origin is reduced while pressureon land for agricultural production and capacity to extract timbermay be reduced. Secondly, low labour requirements may makeforestry an attractive option for those leaving farms to workoverseas and remittance payments may also be used to intensifyagricultural production or educate children, both of which mayact to reduce pressure on forests.The effect of the 2008/2009 economic downturn on demographyand forestry is difficult to assess given scant data on populationmovements. In the aftermath of the Asian economic crisis,reversals in rural-urban migration trends were, however, reported.Fears of increasing rates of deforestation were, however, largelyunrealized (see Box 3.2). Since the beginning of 2009, workers inSoutheast Asia have been reported to be returning to villages inresponse to the economic downturn (New York Times 2009). Theultimate scale of migration is difficult to estimate, but effects onforestry are likely to be less significant than the effects of policiespursued in response to the downturn.3.2. ECONOMIC CHANGESEconomic woescontinue to affectthe regionAsia-Pacific economies have been rocked by several major eventsduring the last decade: the bursting of the ‘high-tech bubble’and the World Trade Center attacks in 2001, the SARS epidemic in2003 and preceding these, the Asian economic crisis beginningin mid-1997. Indonesia, Thailand, Malaysia and the Philippineswere among the most severely affected. Subsequently, China,the region’s largest producer and importer of forest products,emerged as the main growth engine in interregional tradeand became an important export destination for economies inSoutheast Asia (ADB 2003). More recently, the global financialsystem has been thrown into crisis by the 2008/2009 creditcrunch and its economic repercussions. The effects on forestryare likely to be mediated by many factors and while deforestationand forest degradation are immediate concerns during periodsof volatility, the connection was not found to be strong in relationto the 1997/1998 economic crisis (Pagiola 2001).85

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional report3.2.1. IncomeCountries havebeen challenged indifferent ways byrecent economicturnsTable 3.2 shows that GDP in GMS countries expanded rapidly after2002 following the region’s recovery from the Asian economic crisisand a global commodities boom. While economic expansion wasseen in all countries, the subregion’s biggest economy, Thailand,moved down the subregional ranking – partly due to the severityof the 1997/1998 crisis. Growth in Cambodia was most impressive,albeit from a low baseline, and Viet Nam also recorded high ratesof expansion. At the Asia-Pacific level, however, growth rates inthe GMS in response to the rise of China and India have beensignificantly lower than the 8-9 percent per annum seen in Southand East Asia between 2004 and 2007 (ADB 2009).Table 3.2. GDP in Southeast Asian countries 1997-2007GDP (2000 US$ billion)Average annual Share of SEgrowth (%) Asia GDP1997 2002 20071997- 2002-2002 20072002 2007Cambodia 2.9 4.3 7.1 8.1 10.6 0.5 0.8Lao PDR 1.5 1.9 2.7 5.7 7.1 0.3 0.3Thailand 125.3 132.1 173.2 1.0 5.6 21.7 20.5Viet Nam 26.3 35.7 52.6 6.3 8.1 4.6 6.2GMS 1 577.0 631.6 844.4 1.8 6.0 100.0 100.01 – excludes MyanmarSource: WDI (2010).Economic growthrates have beenhighest in lowincome countriesThe 2008/2009credit crunchcaused a sharpdownturnGMS countries have maintained their relative positions regardingstandard of living as per capita purchasing power parity hasincreased (Figure 3.3). Rates of increase have been highest in lowerincome countries: Cambodia, Viet Nam and Myanmar, althoughabsolute gains have been considerably greater in Thailand.The 2008/09 credit crunch has, however, recently caused a sharpdownturn in growth rates across the region (Table 3.3). Thailandwithstood the initial crisis well – partly as a result of measures takenfollowing the 1997/98 crisis – while low income countries were lessaffected due to their limited integration into the global economy(World Bank 2009a). The subsequent economic slowdown hasdisproportionately affected Thailand and Cambodia wherereliance on export markets is highest.86

KEY DRIVERS OF CHANGEIn Southeast Asia as a whole,GDP growth fell from 6.5percent in 2007 to 1.2 percentin 2009, but was forecast torebound to 5.1 percent in2010 and 5.3 percent in 2011(ADB 2010). Countries withlimited external linkagesescaped the worst effectswhile export dependentcountries were hardest hit.Table 3.3 shows how highlevels of export dependencehave been correlated withGDP fluctuations. Cambodiahas seen the steepest dropin the region due to reduceddemand for labour intensiveexport goods in majormarkets (World Bank 2009b).Thailand and Viet Nam asfood exporting countrieshave also been hit, while LaoPDR has performed relativelywell although exports andimports are expected tofall (ADB 2010; World Bank2009b).Figure 3.3. GDP per capita purchasing power parityfor GMS countries, 1996-2010 (constant 2005international dollars) 1Source: WDI (2010), World Bank (2010).The region mayexperience lowerlevels of growth to2020Overall, developing Asia weathered the 2009 downturn well andwas the first global region to emerge from the crisis. Risks to theglobal outlook could, however, negate recent growth trends (ADB2010). While economic stimulus continues, there are concernsthat developed countries are converging on ‘lower growthequilibrium’ and that export-led recovery cannot be relied uponto reinflate developing economies in East Asia. Significant riskremains for several GMS economies and GDP across East Asia isexpected to grow at more modest rates than anticipated beforethe downturn (World Bank 2010). Maintained fiscal stimulus inChina and regained economic momentum may provide supportfor developing East Asia, but, excluding China, growth in thatsubregion in 2009 was only 1.3 percent, only slightly stronger thanin sub-Saharan Africa (World Bank 2009b; World Bank 2010).1 2009 estimate and 2010 forecast assume pro-rata growth between GDP and per capita GDPat purchasing power parity.87

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportForeign investmentis falling andpoverty mayincreaseThe subregion also experienced a precipitous drop in foreign directinvestment (FDI) following the 2008/2009 downturn. Cambodiaand Lao PDR are particularly dependent on FDI as shown in Table3.3 and countries that rely on external borrowing, such as Indonesiaand the Philippines, are also vulnerable to such reductions (ADB2009). Declines in remittances, which are particularly important inthe Philippines, are also damaging economies. Indonesia, Thailandand Viet Nam as significant exporters of overseas workers, mayalso suffer if the rebound is not sustained (IOM 2003). Asia’s strongperformance in poverty reduction has been dampened by thedownturn and wage rates have fallen while jobs have been lostfrom export, manufacturing, construction and services sectors(World Bank 2010).Table 3.3. Exports and FDI as percentage of GDP in 2007 and GDP growth andforecasts to 2010Export ofgoods &services (% ofGDP)Net inflows ofFDI(% of GDP)GDP growth (%)2007 2008 2009e 2010fCambodia 65.3 10.4 10.2 6.7 -2.0 4.4Lao PDR 37.4 7.9 7.5 7.5 6.7 7.7Thailand 73.3 3.9 4.9 2.5 -2.3 6.2Viet Nam 76.8 9.8 8.5 6.2 5.3 6.5e = estimate, f= forecastSources: WDI (2010); World Bank (2010).The downturnmay be deep andlasting withoutappropriateresponsesEffects on forestrywill be mixedThe main fear in the subregion is for a protracted recessionthrough which the financial sector would be jeopardized (ADB2009). Economic recovery will be supported by middle-incomecountries investing in physical and human capital to move up thevalue chain, while low-income countries have an opportunity toincrease manufacturing and integrate into global and regionalproduction networks. Increased attention to regional integration,and commitment to the Association of Southeast Asian Nations(ASEAN), is required given prospects for slower growth in advancedeconomies (World Bank 2010).The effects of the downturn and rebound on forestry are difficultto judge, but analysis of the situation following the 1997/98 Asianeconomic crisis suggests that impacts may reverberate for anextended period even after ‘recovery’ (Box 3.2). China is currentlypromoting domestic consumption and this is likely to increaseimport growth, particularly of raw materials, but also of consumer88

KEY DRIVERS OF CHANGEgoods (World Bank 2009a). In relation, the GMS is in a good positionto regain momentum from resumed global growth given opentrade regimes and export-oriented economies. However, growthin the coming years is likely to lag behind that seen over the pastdecade due to the need to increase savings in export markets andbanking and financial risks remain (World Bank 2009a). Largereconomies with greater purchasing power and less reliance onexports are likely to fare better due to greater potential relianceon domestic consumption.Forestry – throughits multiple roles–can play to theprevailing trendIn the long term, it is generally recognized that high rates ofeconomic growth place greater demands on land and forestresources and in forest-rich, less developed countries, thedownturn is likely to result in some relief of pressure on forests.More affluent societies can, however, better afford non-commodityforest values than those where weak governance, shortagesof alternative livelihood options or undeveloped economiesplace excessive demands on natural capital (e.g., Lanly 2003).It is important to note, however, that because of the multiplefunctions of forests, management can be adapted to suit differentcircumstances. During a downturn, for example, forests can bevaluable in providing employment, supplying building materialsand acting as safety nets, whereas when growth rates are high,forest values may be more associated with providing materials for,and employment in, export industries, acting as an ecotourismattraction and means of income generation for absentee landlords.Box 3.2. The Asian economic crisis and deforestationThe Asian economic crisis of 1997/1998 resulted in a protracted economic slowdown, price and exchange rate fluctuation and increased rates of poverty aroundthe region (World Bank 2007). Reversals of rural-urban migration were seen asworkers returned to rural areas following job losses. Lower remittances from thosestill working away from home and changes in relative prices of consumed andproduced products were also recorded (Pagiola 2001).In the Philippines, Thailand and Indonesia, initial concerns that the crisis wouldresult in increased rates of deforestation were largely unrealized due to lowerthan expected rates of return migration and forests having already been clearedin many areas to which people returned. Even where workers returned to frontierareas increases in forest clearance were not recorded except in parts of Riau andSulawesi in Indonesia. There were, however, widespread increases in collection offorest products as a result of rising commodity prices and reduced income (Pagiola2001).Some reduction in expenditure on protected areas and public works programmes,and road building in particular, were also reported but the overall impact of theeconomic crisis on deforestation was assessed to be less than had been feared.The most significant effects were thought to be through changes in relative pricesand coping strategies of rural households. Immediately following the crisis, and89

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportdespite substantial increases in palm oil prices, oil-palm plantation establishmentin Indonesia fell due to the collapse of the financial sector and resulting lack ofinvestment (Pagiola 2001).Ten years after the crisis, statistics show that rates of oil-palm plantationestablishment had been regained in Indonesia and increased rapidly after 2001(see Section 3.3). The change in relative prices brought about by the collapse ofthe rupiah made export markets considerably more attractive. In combinationwith low oil prices and high palm oil prices over the past decade, the rapid rates offorest conversion observed in Indonesia are unsurprising.3.2.2. Structural changes in economiesSectoral shifts ineconomies willcontinue to affectforestryEconomies aregradually movingaway fromagricultureWith increasing levels of socio-economic development in thesubregion, sectoral shifts will continue to affect forestry. In general,movement away from agriculture and towards industry andservices relieves pressure on forests as subsistence agriculturalproduction diminishes. Income growth can at the same timefinance forest protection, although population density and ruraldevelopment policy also play major roles. Additionally, foreigninvestment in agriculture has brought a new dimension to ruraldevelopment in the GMS in recent years and may challengeestablished trends.In Cambodia, Myanmar and Thailand, large proportions of thepopulation are employed in agriculture as shown in Figure 3.4.Shifts in employment from agriculture to industry and services inCambodia, and to a lesser extent, Thailand and Viet Nam, are alsoevident. In Cambodia, 78 percent of the population was employedin agriculture in 1990 compared to 60 percent in 2004. In Thailandand Viet Nam reductions of around 7-8 percent were recordedbetween 1997 and 2004/2005. In Myanmar and Lao PDR, althougha shift away from agriculture is probably taking place, supportingdata are not available.90

KEY DRIVERS OF CHANGEFigure 3.4. Employment by sector in GMS countries 1997 – 2004Source: WDI (2010).Rural populationgrowth maybalance structuralshifts in economiesRelatively high rates of rural population growth in Cambodia andLao PDR (see Section 3.1) are likely to negate the effects of shiftsin economic structure on forestry. In Thailand and Viet Nam whererural population growth is low or zero, shifts towards industry andservices may have greater impact. In Thailand, forest regrowth andabandonment of agricultural land for example, is already beingreported as outlined in the following section.3.2.3. Economic viability of forest managementTrends in societyare changing theeconomic positionof forestsThe economic viability of forest management for woodproduction is dependent upon many factors: timber demand;market access; availability of financing; industrial efficiency;benefit distribution; technical and management capacity; andthe policy and institutional framework. Natural forests in the GMShave historically provided wood at low cost to consumers bothwithin and outside the subregion. With depletion of commerciallyvaluable species, falling stocks and slow returns on investments,the economic viability of forestry relative to other land uses ischanging. The legacy of high-impact logging, high grading andunsustainable management of forests has also come to influenceboth the present and the future economic viability of forestmanagement (Samsudin et al. in prep.). The rising value attributedto non-consumptive uses of natural forest has also led to greaterforest protection, which often rules out harvesting. Whilemechanisms are being established to internalize costs associatedwith production of environmental services from forests, there isstill some way to go before revenues become available.91

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportInvestment inforestry hasfocused on pulpwood productionDeforestationrates are linked tocommodity pricesMaintenance ofnatural forests ishighly dependenton policy and itsimplementationThe economicdownturn isaffecting forestry inseveral waysWith sustainable management of natural production forestsyet to emerge on a large scale in the subregion, plantationshave become an increasing focus for wood production. Thecomparative profitability of wood production has, however, oftenbeen lower than other land uses associated with higher pricedproducts, shorter return periods or less product competition suchas oil-palm and rubber. The longer rotation periods necessary forsawlog production have generally proved less popular and pulplog production has been a more common focus for investment.With increasing recognition of local rights and trends towardsallocation of land to local levels, this pattern is likely to be reinforcedgiven the preference of smallholders for short investment periods.Fluctuations in the rate of deforestation have been observed inresponse to global commodity prices (Stern 2006). Currencydepreciations in Southeast Asia following the 1997/1998 crisis weresevere and long lasting. In 2005, Lao Kip was trading at 12 percentof its 1997 US dollar exchange rate. Such depreciations across thesubregion increased the attractiveness of export markets and thehigh forest product and agricultural prices that resulted are likelyto have contributed to increased deforestation and degradation –especially where institutions were weak (Angelsen and Kaimowitz1999).Up until the 2008/2009 economic downturn, although woodproduct prices were comparatively high in the GMS due the globalcommodities boom, SFM failed to make significant ground. Whereincreases in harvesting do not result in increased investment inthe resource base, forest product production is unlikely to besustained. In Cambodia, for example, it has been suggested thegovernment should have received over US$100 million in loggingrevenues in 1996, but only received US$10.7 million (Dauvergne2001).So far, exchange rate depreciations associated with the currentdownturn have been small, and effects similar to those seen afterthe 1997/1998 crisis are unlikely to materialize. Being an integralpart of the larger economy, however, the forest sector has beenaffected in other ways by the downturn (FAO 2009):• Demand for wood and wood products has declinedsignificantly resulting in scaling down production, decline intrade, mill closures and increased unemployment.• As existing capacities remain underutilized or closed down,investments in new capacities are being deferred or dropped.• Recession has dampened the ability and willingness to payfor environmental services and has affected demand forenvironmental services, including carbon markets, ecotourism,etc.• Continued economic woes could adversely affect investmentsin SFM, especially as the capacity of key players likegovernments, the private sector and communities decline.92

KEY DRIVERS OF CHANGE...there are alsoopportunitiesSFM in productionforests may notappear on a largescaleThe economic downturn has, however, also provided opportunitiesfor the pursuit of more sustainable approaches to management. Asattention shifts to rebuilding real assets, creation of employmentand the pursuit of green development, forestry could become acore area for economic renewal investments. In relation, forestsand wood products have many factors working in their favourduring financial crises (Ze Meka 2009):• The impact of the crisis on wood prices has so far been lessdramatic due to trade playing a lesser role in timber pricesthan for many other commodities.• The versatility of wood utilization leads to diverse marketopportunities.• The flexibility of forest management (there is no obligation toharvest trees when the market is unfavourable).• The possibility of combining timber, NWFPs and environmentalservices to optimize forest output under varying economicconditions.In the long-term it is likely that forest management for productionwill only remain economically viable where institutionalarrangements are conducive to SFM. Without implementationof improved management, high-paying markets may becomeunavailable and, perhaps more importantly, the productivefunctions of forest are unlikely to be maintained.3.3. TRADETrade looks set toincrease yet morein the GMSASEAN’s traderelations withChina and Indiaare strengtheningTrade plays a critical role in the economies of almost all GMScountries. Thailand, Viet Nam and Cambodia are particularlydependent (Table 3.3). With falling barriers to trade andexpanding transport routes, the GMS is likely to see increasedeconomic integration and transboundary business activity in thecoming years. To facilitate cross-border movement of people,goods and vehicles, the GMS Cross-Border Transport Agreement(CBTA), has been developed (ADB 2005). The agreement aims atcooperating for economic benefits and to increase internationalcompetitiveness. The agreement parallels road developmentsin the subregion that will significantly improve connectionsto markets for previously isolated and undeveloped areas (seeSection 3.5.1). For example, Lao PDR, the only landlocked countryin the subregion, is becoming increasingly transected by allweatherroads linking neighbouring countries and deep waterports. Lao PDR is also in the process of accession to the WorldTrade Organization (WTO) – the last country in the subregion tojoin.Implementation of the ASEAN Free Trade Area (AFTA) CommonEffective Preferential Tariff agreement (CEPT) of 1992, commitsthe six original ASEAN member countries to abolish importduties on goods from 1 January 2010 and from 1 January 201593

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportfor Cambodia, Lao PDR, Myanmar and Viet Nam. 2 Concurrently,ASEAN and China have established a free trade area for the originalASEAN members, with inclusion of Cambodia, Lao PDR, Myanmarand Viet Nam planned for 2010. With effect from 1 January 2010,Malaysia Indonesia, the Philippines and Thailand have joinedwith China in a free trade block that will eliminate duties on allproducts (ITTO 2009h). Although trailing China in terms of tradingimportance, India has also made efforts to cultivate relations withASEAN through the Look-East policy in 1992. This looks set toinfluence Myanmar most of all, given India’s focus on using thepolicy to develop its remote northeast region.Tariff reductionswill mostly haveminor effects onthe forestry sectorPerceptions oftropical hardwoodsin internationalmarkets are moreimportantThe effects on forestry of falling regional trade barriers are likely tobe mixed. As only more processed wood products generally carryimport tariffs, changes are for the most part likely to affect forestproducts indirectly through the effects of increased economicdevelopment on consumption. Additionally, high tariffs on valueaddedproducts may not be removed under upcoming tradeagreements if the products are deemed sensitive. Tariffs andnon-tariff trade barriers in large and high-paying export marketsare also likely to be of more importance to regional exporters ofprocessed wood products than barriers in neighbouring countries.The perception of tropical wood as a product inextricably linkedto illegal logging and environmental degradation is of greatsignificance to the forest product trade in the subregion and itis feared that big importers may shy away as a result. Althoughconsumers in high-paying markets have often been unwillingto pay a premium for certified timber, it is possible that publicprocurement policy and corporate strategies may lead the wayfor an exodus from tropical timber markets. Import restrictionsin the EU and United States look set to change trading patternsin the region unless measures are taken to improve forest sectorcontrol (Box 3.3). Under such a scenario, trade with less discerningpartners may expand, although timber prices could fall and reducethe viability of forest management for wood production.Box 3.3. Changes to import restrictions in the European Union and UnitedStatesThe European Commission (EC) is now considering new legislation designed to removeillegal wood from the supply chains of products destined for the European market. Theproposal has been influenced by the Lacey Act Amendment passed in the United Statesin May 2008, but differs in some significant respects. The Lacey Act makes it an offence inthe United States to trade in any wood product sourced in contravention of the laws ofany other country. It therefore strongly implies, but does not require, that timber-tradingcompanies in the United States implement management systems to minimize the risk ofany illegal wood entering their supply chains. The act is already causing strong reactionand activity amongst timber retailers and pressure is being applied to overseas suppliers.In contrast, while not making it illegal to trade in wood products in contravention of thelaws of another country, the EU’s proposed legislation places an obligation on European2 http://www.bilaterals.org/article.php3?id_article=1395494

KEY DRIVERS OF CHANGEoperators to implement a ‘due diligence system’ to minimize the risk of illegal woodentering supply chains. Currently, draft amendments to the legislation are being reviewedby the European Parliament. The earliest that requirements are likely to be imposed on EUoperators would be the second half of 2011.Source: ITTO (2009c; ITTO 2009l).3.4. AGRICULTURAL EXPANSIONAgriculturalexpansion is theprimary reason forforest conversion inthe GMSThe primary reason for forest conversion in the GMS isestablishment of cash crop plantations and agriculture, whichin recent years has had a stronger impact on forest coverthan logging (Stibig et al. 2007). Figure 3.5 shows expansionof agricultural area in the GMS. The highest recent rates ofconversion were in Lao PDR, Myanmar and Cambodia, while smallreductions in agricultural area were recorded in Thailand. Thereductions in Thailand result from a number of causes includingvoluntary conversion to other land uses including plantationforestry; land confiscation, especially for forest conservation andat higher elevations; and voluntary abandonment of land oftenlinked with unprofitability (Leblond 2008). Although not directlyassociated with increase in forest area, these trends representreversals at the agricultural frontier and decoupling betweeneconomic development and deforestationFigure 3.5. Agricultural area in GMS countries, 1997-2007Sourc e: FAO (2009).A few agriculturalcrops account for alarge proportion ofdeforestationThe overall trend in the subregion is largely due to the expansionof cultivation of a relatively small number of agriculturalproducts (Stibig et al. 2007). In Cambodia, Lao PDR, Myanmarand the highlands of Viet Nam the production of rubber, cashewnuts, coconut and sugar cane, and of cacao, coffee and tea inhighland areas has been a major cause of forest conversion.95

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportChanges in coastal zones in Myanmar, Thailand and Viet Namhave taken place as a result of demand for land for shrimp pondsand agriculture and mangrove forests have been lost as a result.Shifting cultivation in the uplands of Myanmar, northern LaoPDR and Thailand has resulted in loss of mostly secondary forestand in central Myanmar, large areas of forest have been clearedfor rice paddy establishment in upper Bago Division and aroundNay Pyi Taw.Rubber plantationsare expanding inforest areasRubber plantations in the GMS are concentrated in Thailand.Smaller areas exist in Viet Nam and Myanmar and in Lao PDRrubber plantations have expanded greatly in upland areas inrecent years as rubber prices increased. Between 2002 and2007, expansion rates were highest in Viet Nam, Thailand andMyanmar. Rubber has been a particularly important cause offorest conversion in Lao PDR, Cambodia, Thailand and the centralhighlands of Viet Nam (Figure 3.6; Stibig et al. 2007).Figure 3.6. Area of rubber harvested in GMS countries, 1997-2007Source: FAO (2009).Oil palm plantationsmay spread in thesub-regionExpansion of oil palm plantations is relevant to forestry in theGMS given projected increases in energy demand. In southernThailand and southern Myanmar, oil palm establishment hasbeen an important cause of forest conversion (Stibig et al. 2007).The growing importance of biofuels resulting from oil price spikesand strategic concerns over energy supply as well as the return ofhigh palm oil prices following 2008/09 reductions suggests thatoil palm plantation expansion will continue in the sub-region.96

KEY DRIVERS OF CHANGE3.5. INFRASTRUCTURE DEVELOPMENTRoads and damsare increasinglyaffecting forests inthe GMSInfrastructure developments, and particularly transportinfrastructure, have long been associated with economicexpansion, the spread of markets and extraction of naturalresources. In the GMS, road developments have provided accessto markets for many isolated populations and have also increasedopportunities for investment and trade. At the same time, forestresources have been depleted as loggers, farmers, agribusinessesand developers have moved in. Dam construction has also hadsignificant impacts, particularly in environmentally sensitive upperwatershed areas where forests provide valuable services includingerosion control and maintenance of water quality, as well asbiodiversity conservation.3.5.1. RoadsRoad densities areincreasing in thesubregionRoad alignmentshould take valuedhabitats intoaccountIn the GMS, road densities are highest in countries with the highestpopulation densities and lowest forest cover – Viet Nam andThailand (Figure 3.7). Relationships between population density,road length and forest cover are not linear, however. For example,while recorded road density in Thailand doubled over the pastdecade and population density rose by more than 8 percent,forest area fell by only around 6 percent. Similarly, road densitiesare high in Viet Nam, although forest cover is increasing.For countries in the earlier stages of development, roadconstruction has more significant and direct effects on forest areaby increasing access to forest areas, improving market accessand raising land value. Increased road densities are more likely toaccelerate deforestation and forest degradation where regulatoryquality is low and it is therefore important for appropriatesafeguards to be implemented in relation to road developmentsand for road alignment to be considered in relation to valuedhabitats. In Viet Nam, for example, the initial proposal for the HoChin Minh Highway now under construction included passagethrough 13 protected areas (ICEM 2003). Improved transport links,however, also improve access to markets for tree growers andto national parks and protected forests for tourists and certainaspects of forest management may therefore garner support.97

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportFigure 3.7. Change in road density in GMS countries, 1996-most recentSource: WDI (2010).The GMSprogramme ishaving significantimpacts in theMekong countriesForests are directlyand indirectlyimpactedImprovedenforcementand customscooperation arenecessaryThe GMS programme, supported by Mekong regiongovernments, the Asian Development Bank, as well as theprivate sector, emphasizes infrastructure development in theMekong countries. Road developments undertaken as part ofthe programme are impacting directly on forest cover and on theaccessibility of forest areas (Figure 3.8).The 1 500-km-long ‘East-West Economic Corridor’ links the Indianand Pacific Oceans through Myanmar, Thailand, Lao PDR and VietNam. The GMS programme is stimulating economic developmentacross the subregion, but has been criticized for inadequacyof social and environmental safeguards (AMRC 2006; VientianeTimes 2009). Concerns are that the programme will increaseaccess to and facilitate illegal trade in wildlife, timber and otherforest products, while also impacting directly on forests. Areasparticularly affected include the northwest and southern partsof Lao PDR and northeast Cambodia (Stibig et al. 2007). In LaoPDR, Cambodia and Viet Nam, protected areas adjacent to areasof development are also threatened by biodiversity and resourceloss (Corbett 2008; see also Box 2.11).Impacts on forests associated with road building may bealleviated through heightened attention to law enforcement invulnerable areas as well as regional cooperation in areas suchas customs inspection and information sharing. Without suchmeasures, the current expansion of roads in the subregion willundoubtedly have huge impacts on forest resources and sectortargets.98

KEY DRIVERS OF CHANGEFigure 3.8. Major road developments in the GMSSource: ADB (2002).99

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional report3.5.2. DamsHydropower is anattractive energysource for thesubregionDams’ adverseimpacts aredifficult to mitigateLao PDR is ofcentral interestin subregionalelectricitygenerationThe impacts of activities in the energy sector on forestry inthe GMS have been expanding with accelerating economicdevelopment. Thailand is highly dependent on energy importsand other countries are increasing their net energy imports.Without alternative sources of energy, hydropower developmentis a particularly attractive option, both for domestic electricityconsumption and for export.Dam developments are commonly associated with forest loss –particularly in upland areas. A report by the World Commissionon Dams (2000) suggested that many dam-related impacts aredifficult to mitigate. Governments in the subregion have, however,begun experimenting with offsetting ecosystem and biodiversitylosses through investment in conservation, regeneration andprotection of high value habitats as detailed in Box 3.4.Lao PDR, the most mountainous country in the subregion, is ofparticular interest in relation to dams given the national strategyto become the ‘battery of Southeast Asia’ – six large dams areunder construction and at least 12 more are at advanced planningstages (International Rivers 2008). The Nam Theun II Dam providesa high profile example, but many other dams are being built andin the Upper Mekong tributaries of Lao PDR, dam developmenthas been a major cause of deforestation, particularly where forestshave been cleared above the inundation area (Stibig et al. 2007).Impacts are expected to increase in coming years as demand forenergy in the subregion grows and more and more hydropowerdevelopment projects are implemented.Box 3.4. Dam construction and forestry in Lao PDRDomestic energy consumption is rising by 8 to 10 percent annually in Lao PDRand in 2004, 97.5 percent of electricity came from hydropower (Leechuefoung2006). In the near future, the Lao Government hopes to export electricity to China,Viet Nam and to Cambodia. The Lao National Committee for Energy has identifiedreduction in reliance on revenues from forest products as a potential benefit ofdam development, but dam construction has often been accompanied by forestclearance and past experience shows that logging is hard to control.Issues surrounding the Nam Theun II Dam provide some insight into the difficultiesassociated with the environmental impacts of dam construction. The proposeddam has attracted significant attention from many groups over a number ofyears (ADB 2001; World Rainforest Movement 2003). Much of the controversyinvolves the adjacent Nakai Nam Theun National Biodiversity Conservation Area,which has been threatened by logging activities associated with clearance of thedam inundation area (World Rainforest Movement 2001). A number of timberprocessingfacilities were set up in the area and, following clearance of thereservoir area, large-scale logging continued in the dam catchment area (WorldBank 2000). This not only had potential effects on the life span of the dam, given100

KEY DRIVERS OF CHANGEerosion and siltation risks, but also ran contrary to the initiative whereby the projectwould contribute US$1 million per annum towards management of the catchmentarea (ADB 2001). Considerable efforts have been required by the government andits partners to bring the situation under control (World Bank 2002).3.6. THE POLITICAL AND INSTITUTIONAL ENVIRONMENTSoutheast Asiais subject toconsiderableoutside influence –both economicallyand politicallyPolarities arechanging and newalliances are beingformedSoutheast Asia has long been an area of confluence between largerregional and global powers and has experienced continuouschange in recent years. The rise to global eminence in the 1990sof the Asian Tigers and their retreat following the 1997/1998 Asianfinancial crisis provided a sharp indication of the unpredictabilityof the global economy (Economist 2008a). A sluggish and patchyrecovery suggested the need for governance and economicreform. Confidence in the Southeast Asian economic miracle andASEAN as a growing regional power subsequently diminished(Anwar 2008). The efficacy of management models built on theprinciple of harmonious relations was also brought into question(Church 2006).The experience of continuing experimentation with democracy, ofregional cooperation and of policy reform in communist and formercommunist states has brought rich variety to an already diversesubregion. From a global perspective, Southeast Asian countrieshave been drawn in many directions by a wide range of powerfulinfluences. The small size of Southeast Asian economies and thediversity of governments within the subregion have increased therisk of pursuing contradictory policies while possibly also erodingefforts to improve governance (Croissant and Faust 2008). In thiscontext, the strength of ASEAN has yet to be proven, although itsrole as a conduit to the international arena for member nationshas been demonstrated (Dalrymple 2000).3.6.1. Trends in governanceForestrystakeholders arechanging with thechanging roles offorestryThe direction ofgovernance andpotential effectson forestry areunclearHistorically, governments, the private sector, the military,communities and civil society organizations have played differentroles in GMS countries and continue to do so. In almost all countries,business-government coalitions, often with military support, havedominated forestry. Depletion of forest resources, calls for socialand economic justice and demands by growing middle classes forforest protection are, however, hastening transference of power tocivil society and to local communities.Surveys showing that East Asians place greater emphasis on goodmanagement and standard of living than democracy may, togetherwith the strong economic performance of some of the subregion’sauthoritarian governments, act to slow democratic reform (NIC2008). Growing frustration at the workings of democracy in101

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportsome countries and curtailment of prerequisites such as pressfreedom, suggest that ‘state capitalism’ may become a preferreddevelopment model. In relation, it is unclear whether governancein the subregion will improve with greater movement towards oraway from democracy (Economist 2008b). Gale (2006) suggests thatbusiness-government coalitions, which are dominant in the Asianmodel of development, may even work against implementationof sustainable development by allowing business interests todominate, although emerging ‘forest transitions’ in China and VietNam challenge this position (Mather 2007).Indicators allowassessmentof trends ingovernanceGovernancestandardsdeclined duringthe last decadeEach country hasstrengths andweaknessesChanges in World Bank Aggregate Governance Indicatorsbetween 1998 and 2008 were assessed to provide an indicationof the extent to which forestry is likely to be supported by widernational developments in the coming years (Kaufmann et al. 2008).Six indicators cover various areas of governance: (i) Control ofCorruption; (ii) Rule of Law; (iii) Regulatory Quality; (iv) GovernmentEffectiveness; (v) Political Stability; and (vi) Voice and Accountability. 3Taking all indicators and countries into account, the overall pictureis of decline in governance standards over the past decade –reductions in scores are evident in almost 75 percent of cases (seeAppendix 1). In general, scores in the GMS are particularly low for‘control of corruption’ and ‘voice and accountability’, but betterfor ‘government effectiveness’. ‘Regulatory quality’ and ‘politicalstability’ suffered the steepest declines in score across the subregionbetween 1998 and 2008. These results suggest that forestry willnot, in the short-term, benefit from significant improvements ingovernance. It is also important to note that countries with themost significant remaining forest resources are also those scoringlowest.The best governed country in the GMS is Thailand, while Lao PDRand Myanmar have the lowest overall scores. Reduced politicalstability and declines in voice and accountability are key concernsin Thailand. In Viet Nam, voice and accountability is poor, althoughrule of law and political stability have improved in the last decade. InCambodia, there has been very little change in the overall standardof governance during the past decade, although political stabilityhas improved. In Myanmar, all indicators of governance are low andfalling.3 Governance scores in 1998 and 2008 for Southeast Asian countries are shown in Appendix 1together with percentile rank for 2008 and change in rank between 1998 and 2008.102

KEY DRIVERS OF CHANGECorruptionhas increasedsignificantlyCorruption constitutes a significant threat to forestry and tonational economies, particularly where revenues from logging aresubstantial. Control of corruption scores, 4 which correlate closelywith rule of law, regulatory quality and government effectivenessin GMS countries, are shown in Figure 3.9. Potential scores rangebetween -2.5 and +2.5, but all countries in the GMS score belowzero and exhibit falling trends. In the Asia-Pacific region as a whole,corruption has also shown a marginal increase. Reasons for therelatively poor performance of GMS countries are unclear.Figure 3.9. Control of corruption scores for GMS countries, 1998-2008Source: WDI (2010).4 Measuring perceptions of the extent to which public power is exercised for private gain,including both petty and grand forms of corruption, as well as ‘capture’ of the state by elites andprivate interests.103

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional report3.6.2. Forest law enforcement and governanceIllegal logging isa serious problemand is increasinglyrecognized at theinternational levelCambodia hashad a turbulentdecade of forestgovernanceIn Lao PDR, effortsto combat illegallogging arebeginningIn several GMS countries the socio-economic contribution offorestry remains poorly realized and underestimated due to benefitcapture by unaccountable interests. Lack of collection of royaltiesand taxes has also undercut markets for products from sustainablymanaged sources while mounting social and environmentalcosts have been overlooked. In particular, uncontrolled logginghas resulted in extensive environmental damage and resourcessupporting the subsistence needs of rural populations have beenremoved, often without recompense. The Forest Law Enforcementand Governance (FLEG) ministerial conference in Bali, Indonesia in2001 constituted a first milestone in efforts to curb illegal loggingand trade at the international level. Attended by representativesof Cambodia, China, Indonesia, Lao PDR, the Philippines, Thailandand Viet Nam, the resulting Bali Declaration recognized, amongstother things, the environmental, social and economic importanceof forest law enforcement and governance and the necessity ofinvolving both importing and exporting countries in correctiveefforts. Demarcation of forest areas, enforcement of propertyrights and improved stakeholder involvement were among themain areas identified to remedy flaws in existing systems (IISD2001).In Cambodia, strengthening implementation of forestry policyand improving forest law enforcement and governance havebeen priority issues since 1998 (Savet and Sokhun 2003). Anumber of obstacles confronting forestry, including corruptionand clientelism have, however, remained untouched by thetechnological fixes promoted by donors (Rotha 2009). Stepstaken to control illegal logging after 1998 were unsuccessful anda logging moratorium was announced in 2001. This resulted inclosure of mills, a reduction in illegal logging and also shifts in thefocus of illegal logging from commercial to small-scale operators,from few players to many and from export to domestic markets.Key factors determining the future success of FLEG effortsinclude the degree of responsibility allocated to the Forest CrimeMonitoring Unit and the capacity provided to implement directaction (Rotha 2009). Alternative livelihoods for military groups andgreater regulation of harvesting and environmental managementare likely to reduce illegal logging, although current road networkexpansion is at the same time liable to expand opportunities.Forest governance in Lao PDR is still at a relatively early stageof advancement and many problems exist with overlappingand conflicting legislation and directives, unclear jurisdictions,frequent government breaches of written law and a general lackof management or procedural norms (Hodgdon 2008). To controlillegal logging, an effort beginning in May 2007 was made toclose over 2 000 wood-processing factories across the country.Although overcapacity in the wood-processing sector is a keydriver of illegal logging, a large share of the illegally traded timber104

KEY DRIVERS OF CHANGEis roundwood and the effects of the mill closures are therefore likelyto be minimal. A new Department of Forest Inspection providesan additional means of improving forest sector governance,although greater government resolve is required in relation toforestry sector governance before detailed inspection becomes arelevant activity.Efforts are beingmade to combatillegal logging inMyanmar but moresupport is neededBreaches offorest law remaina problem inThailand and havebecome a sensitivepolitical issueFLEG-relatedefforts have notyet had significantimpact on thegroundForest governance in Myanmar is affected by the prevailingpolitical and socio-economic situation. Although the MyanmarSelective System (MSS) includes procedures to verify the legalityof logs, it is doubtful whether it continues to be implemented orwhether the annual allowable cut is adhered to (Thaung 2009). TheMinistry of Forestry is attempting to address forest governanceissues although no independent mechanism to verify timberlegality has been established. Talks between China and Myanmarhave also been held in relation to logging operations in borderareas, but concrete actions and greater involvement of regionalmilitary commanders and ethnic leaders are still required. A weakjudicial system, law enforcement officers’ low pay and replacementof technical officers with military personnel in forestry agenciesalso pose problems. With the current lack of foreign assistanceand low investment in forestry, it is doubtful that the situation willimprove in the near future unless reforms are implemented.In Thailand, illegal logging is still reported at considerable levelsand conflicts between authorities, villagers and civil societyorganizations and between conservation-oriented and peopleorientedNGOs are widespread and often fierce. The 1989 loggingban and subsequent forest conservation efforts led to tenseopposition between conservation-oriented and people-orientedgroups. It is estimated that more than 1 million households innational parks, wildlife sanctuaries and national forest reservelands are considered illegal by law. As such, the challenge ofbalancing forest conservation with other forest functions stillremains at an early stage in Thailand (Ongprasert 2009).Despite increased attention to forest law enforcement andgovernance around the subregion, significant changes on theground have been slow in developing. Converting rhetoric intoaction has proved challenging as a result of conflicting priorities,lack of resources and reluctance to stem the flow of forest productsfor reasons that are not immediately tangible. The reductions ingovernance scores in much of the subregion suggest that in thefuture, forestry development may be guided to a greater extentby local-level exigencies, private sector development and civilsociety action. The following sections outline possible scenariosgiven potential shifts in economic growth and institutionalperformance.105

PROBABLE SCENARIOS AND THEIR IMPLICATIONS4PROBABLE SCENARIOS ANDTHEIR IMPLICATIONSGMS economiesare evolvingrapidlyEconomicuncertainty isagain playing aleading role in thesubregionNew drivers ofchange in forestryare emergingOver the past half century, GMS countries have witnessed a majorshift from predominantly subsistence, agrarian economic bases toindustrialized societies. These changes have been accompaniedby growing urban populations and establishment of a numberof large regional cities. At the same time, the agricultural frontierhas advanced as demand for land and resources from growingpopulations – both from within the subregion and outside – hasincreased. The pace of transition has varied, but in many countriesgovernment policies have taken advantage of low labour costsand the locus of manufacturing and some service industries hasshifted to Asia (NIC 2008). Economic growth in recent decades haslargely been fuelled by exports, which in 2007 accounted for 73percent of the GMS GDP (WDI 2010).Ten years on from the 1998 Asian crisis another financial crisis– this time centred on developed nations and global financialcentres – has erupted, pushing a highly dynamic and increasinglymultipolar region into uncharted territory and considerableuncertainty. Recurrence of capital flight following the October2008 credit crunch must once again weaken the subregion’sconfidence in international financial systems, especially as, thistime, the crisis cannot be said to be home grown (World Bank2008). The subsequent slowdown could have severe impacts onGMS economies, as the demand for products declines and foreigninvestment dries up. Countries with a high share of exports inGDP will be more severely affected depending on how long thesituation persists.The effects of environmental shocks on political processesand of ‘stealth’ influences, such as overseas remittances andmigration, on forestry and national development are growing inimportance and are set to become increasingly significant as theclimate changes and populations mobility rises. Internationally,legislation is increasingly being used to support environmentalmanagement where softer approaches have failed, particularlyin relation to forest law enforcement and trade. Within thesubregion, governance indicators have been falling in all countriesand support for SFM may weaken as a result. International effortsto include deforestation and forest degradation in climatechange agreements offer hope for additional support for forestmanagement. At the same time, rates of road and infrastructuredevelopment across the subregion suggest that in the face of107

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reporteconomic growth and agricultural expansion, any reductions indeforestation and degradation will be hard won.The following sections develop scenarios for the GMS in 2020, drawing on countrypapers prepared during the outlook process and additional literature from aroundthe subregion.4.1 RATIONALE AND METHODOLOGYA scenario can be thought of as an internally consistent view of the future – nota forecast, but one possible future outcome (Porter 2004). Outlook scenarios maybe developed on the basis of broad potential changes in society to help provideperspective on forestry sector development in terms of the overall situation.Scenarios encourage broader thinking, allow expression of generic ideas without riskof censure, present a form of risk analysis and also provide a background againstwhich to develop robust, proactive policy and build system flexibility.Scenarios were developed according to the following steps:1. A list of direct and indirect drivers of change in GMS forestry was developedon the basis of country-level outlook processes, literature review andexpert opinion.2. Information on the direction of change in major drivers and their effects onforestry was collected, as detailed in Section 3.3. Two regionally important drivers with high expected volatility anduncertainty in their future course and also with a high level of importanceto forestry were selected. Based on these two drivers, four basic scenarioswere constructed by considering the impacts on forestry of combinationsof the two variables at contrasting levels (high/low).4. The scenarios were further developed by taking into consideration otherdrivers of change – i.e., those estimated to be less volatile in their trajectoriesand those estimated to have significant but less important effects.4.2 PARAMETERS USED IN DEFINING SCENARIOSFrom the wide range of drivers of change the two factors selected as being mostwidely influential and of uncertain future trajectory, and used to develop thescenarios were:1. Aggregate demand – encapsulating responses to economic growth,changes in the distribution of income and structural changes in theeconomy.2. Effectiveness of policies and institutions – this factor includes thequality of decisions made in regulating demand and the effects of demandand the quality of the systems used to implement policy (institutions andgovernance).Comparatively long-term stable developments such as population growth andinfrastructure development were not included as key variables in the scenario analysis.Rather, it was assumed that changes would be constant across all four scenarios.Similarly, it was assumed that environmental shocks – storms, natural disasters and108

PROBABLE SCENARIOS AND THEIR IMPLICATIONSclimate change impacts, etc. – would be equally likely across all four scenarios despitetheir potentially pivotal influence on forestry because of the difficulty in predictingevents and associated socio-political responses.4.3 DEVELOPMENT SCENARIOSThe four quadrants in the table below relate to different levels of the two key drivers ofchange. Each quadrant is named according to the outcomes that changes in the driverswill cause as summarized in each box.Poorpolicy andinstitutionalperformanceEffectivepolicy andinstitutionalperformanceLow aggregate demand1. Socio-economicdevelopment stallsEconomic growth – recession;high income disparities and highlevels of povertyDemographic – little change butmore people stay in agricultureEnvironmental policies – lowimpactDemand for land and naturalresources – lower3. Sustainable developmentEconomic growth – recession butdevelopment continues on thebasis of reformed economic andsocial policiesDemographic – little change butmore people stay in agricultureEnvironmental policies – highimpact but dependent on fundingDemand for land and naturalresources – lowHigh aggregate demand2. Unsustainable growthEconomic growth – at pre-creditcrunch rates; mainly based onnatural resource exploitationwith low investment in humanresourcesDemographic – gradualmovement away from agricultureEnvironmental policies – lowimpactDemand for land and naturalresources – high4. High-growth developmentEconomic growth – at precreditcrunch rates; low incomedisparities and low levels ofpovertyDemographic – gradualmovement away from agricultureEnvironmental policies – highimpactDemand for land and naturalresources – lower109

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportHard times (Socio-economic development stalls)Socio-economic development stalls as a combined result of the global recession and weakgovernance. The recession takes a number of years to lift and precipitates social rifts and instabilityin more fragile areas in the subregion. A multipolar global system emerges and, in comparison withpreceding bipolar and unipolar systems, risk of instability is increased (see NIC 2008). People return enmasse from cities to rural areas as jobs are lost and some agricultural expansion takes place in frontierareas. Levels of foreign investment and export demand fall as do commodity prices. Countries withless diversified economies and greater dependence on exports and FDI are deeply affected. Greaterdemocratization becomes no more than a long-term prospect as economic globalization withoutsufficient social and environmental investment undermines liberal institutions and applies increasingpressures to fledgling democracies. As a result, Southeast Asian governments move increasinglytowards ‘state capitalism’ as a model for development.Policy and institutionalweaknesses becomeincreasingly apparentand reliance on theinformal sector grows,precipitating a downwardspiral. Funding for forestryis constrained by lack ofcredit availability and poorinvestment environments.Contraction of the formaleconomy makes way forincreased illegal loggingand undermines efforts toimplement SFM. Loggingactivities cease in someareas due to unprofitabilitywhile more competitiveoperators increase volumes to maintain income. The net result is a reduction of direct pressure onforests, although active management is also reduced and small-scale illegal activities proliferate. Asa result of the downturn, poverty rates rise in forest areas and demand for NWFPs and woodfuelalso increases. Environmental shocks provide impetus for policy reform, but responses are weak andpopulations remain at risk as forest cover in fragile watersheds and coastal areas is disturbed andcleared. Neglect for investment in research and education and human resources compounds theproblem and places the long-term management of forests in jeopardy.Calls for environmental and social justice go largely unheeded due to weak governance and lack offinancing to support reform. Due to falling profits and growing corruption, the private sector retreatsand abandons efforts to join with civil society in improving environmental and social conditions.International engagement and development assistance diminish and flight of human capital to moreprosperous regions is seen. Falling global carbon emissions and reduced pressure on land and forestresources due to the downturn dissuade investment in REDD and forests are left in limbo in relationto carbon funding.The global economic balance shifts towards Asia while United States and EU markets become lessimportant timber export destinations due to low growth in consumption and stringent legalityand certification requirements. Land allocation processes undertaken prior to the recession yieldbenefits as the recession fades and investment becomes available to increase production of forestproducts. Elsewhere, investment is discouraged by overlapping jurisdictions, an overbearing statekeen to extract revenues and unstable tenure. Except in a few countries where the forestry sectorbecomes more fully fledged, a long-term decline in forest products production is seen in SoutheastAsia and remaining forest resources are trapped in a cycle of degradation without reinvestment orclear allocation of rights and responsibilities.110

PROBABLE SCENARIOS AND THEIR IMPLICATIONSOverburn (Unsustainable growth)Economic growth continues at a rapid pace and many people benefit from newfound wealth but therisk of economic crisis resulting from structural inadequacies and speculative investment remains.The private sector leads development and creates demand for improved governance frameworks andquality control, but institutions cannot keep up and corruption flourishes. Employment in industryand services expands rapidly nonetheless and urban populations swell while only the young and oldremain in rural areas. Investment in long-term planning is limited and environmental costs mount asdesires for short-term profits gain the upper hand. Economic activity is geared towards export marketswhile domestic needs are largely ignored and domestic demand remains low as a result. Social andpolitical polarization increases but while economic growth persists problems are pushed aside.Natural resources are exploited intensively and little attention is paid to sustainable management andassociated human resources development. Remaining natural forests are damaged by overharvestingand weak law enforcement while investment in plantation establishment is limited. Demand for forestproducts is high and as resources are exhausted, supplies are increasingly sourced from countries wherenatural forests remain or efficient plantation sectors have been established. Switching to materials witha larger carbon footprint than wood such as concrete, plastic, steel and aluminium also occurs. Increasedfocus on urban sectors reduces demand on land, however, and logged-over forests in more remoteareas are left to regenerate with a proportion of the original biodiversity intact. International efforts toreduce deforestation and degradation fail as a result of mechanistic complexity, limited institutionalcapacity and competition resulting from high land and commodity prices. By 2020, national levels offinancial and physical capital have increased substantially, while social and natural capital have beenseverely eroded.Society is strained by a widening generationgap and urban populations becomeincreasingly detached from a rural ethos.Conservationist civil society groups formin urban areas and forge alliances withinternational environmental NGOs inefforts to prevent further environmentaldegradation. Governments remain weakand malleable, however, and change inthe environmental arena proves difficult toeffect in the face of high opportunity costsrelated to the continuing economic boom.Poverty rates increase where markets fail toreach and erosion of tenurial rights in ruralareas forces rural populations off the land.The probability of environmental disastersincreases due to changing weather patterns,increasing population densities, expandinginfrastructure development in marginal areas and inadequate social and environmental safeguards.Towards 2020, the mounting social and environmental costs of unconstrained pursuit of economicgrowth become increasingly apparent as does the threat posed to long-term economic growth.Movement towards more inclusive development is effectively forced on society, but with considerablyhigher costs and higher levels of social disruption than if steady investments had been made over theyears.In many localities in 2020, the forestry sector is in a state of collapse having been relentlessly exploitedwithout reinvestment. Wood products are increasingly imported due to poor institutional frameworksdiscouraging investment in planted forests. Market responses lead to a gradual rectification, but therural landscape is irrevocably changed with few remaining fragments of degraded natural forest in asea of industrial plantations. Only decades into the future does society fully recognize the losses thattook place for want of greater foresight.111

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportSlow and steady (Sustainable development)Economic growth is constrained by falling domestic and international demand, but policy reformand prudent investment in institutional strengthening and environmental rehabilitation stimulateincreased social cohesion and environmental robustness. Increasing energy prices drive efficiencyimprovements and a move towards renewables and recycling while environmental shocks createimpetus for wide-reaching policy reforms and a general ‘greening’ of the economy. The shift isstrengthened by pressure on the private sector to improve corporate social and environmentalresponsibility. Mechanisms and incentives available to support forest conservation and sustainableand legal management of production forests are fully utilized and as the efficacy of policy reforms isrealized, social capital is strengthened in a virtuous cycle.Those seeking new opportunities are attracted to overseas jobs, but the improved quality of nationalinvestment environments and increasing national pride ensure that revenues contribute to nationaldevelopment through familial links. Gradual shifts in employment towards services and industryoccur as society develops, although agriculture remains of central importance and investment yieldreturns, particularly from export markets. Poverty levels fall as a result of effective rural developmentprogrammes and agricultural extensification rates fall. Clarification of jurisdictions in nominally stateownedareas also contributes in dampening demand for land while more modest levels of globaleconomic growth reduce land grabbing.Forest resources in many areas, having beendegraded over many years, are no longereconomically viable for production, and diminishedconservation values discourage investment forbiodiversity conservation purposes. A rethink offorestry sector objectives results in a revision oftargets with greater emphasis on quality and lessfocus on the extent of forest resources than before.Forestry institutions are increasingly divided intoproduction and protection divisions and whileproductive functions remain under governmentregulatory control, the private sector is increasinglyengaged to manage forest resources for economicpurposes.A stable and efficient institutional environmentencourages farmers to plant, grow and harvesttrees without undue hindrance or risk. As a result, wood products are increasingly sourced from outsidenatural forests and pressure is relieved. Improvements in law enforcement and governance stimulategreater investment in, and better management of, forest resources. As a result, income derived from timberextraction rises, leading in turn to greater interest in forestry as an economic sector. Establishment of policyand regulatory frameworks favourable to investors also stimulates corporate investment in plantationsand a general upturn in sector productivity and competitiveness is seen. At the same time, focus onpromoting sustainable production technologies increases domestic employment as well as environmentalsustainability.By 2020, a switch from natural to human, financial and physical capital is seen and increased attentionto equity results in rising levels of social and human capital. Migration of working age populationsout of rural areas in search of wages gains pace, but rising standards of living in rural areas encourageleavers to return, bringing investment and higher levels of human resource capacity.Environmental shocks continue to take their toll in human terms and also put strain on the nationaleconomy and infrastructure. National and overseas relief is, however, at hand and sound planningby effective institutions promotes infrastructural improvements which reduce risks associated withfuture disasters. Improved monitoring of the condition of forest resources also provides informationnecessary for responses in relation to the unforeseen effects of climate change on forest ecosystems.112

PROBABLE SCENARIOS AND THEIR IMPLICATIONSLiving on the edge (High-growth development)High economic growth rates are regained following the prolonged scare of economic depression.Institutional performance is improved in response to this sobering alert and the looming threat ofclimate change. Strain is, however, placed on society and the environment as a result of continuedhigh rates of consumption and socio-economic development. A future in which environmentalrehabilitation is increasingly implemented as income increases is credibly envisaged, althoughcorresponding institutional frameworks remain only partially established and full implementationtakes some time. A degree of imbalance develops between public and private sectors as economicgrowth continues to strengthen. Regulatory efficiency is, however, improved and proactivepolicies are implemented to maintain economic growth while ensuring preservation of social andenvironmental capital. Environmental shocks serve as turning points and help drive the transitiontowards a sustainable and low-risk future. A period of considerable strain is experienced as the sizeand composition of economic sectors and institutions is adjusted, but strong leadership inspiresconfidence throughout the transition.Demand for agricultural landincreases, but as a result ofsecure tenure and equitabledistribution of land, as well astechnological developments,expansion into forest areasis limited. Some forestsmanaged for sustainableyield are, however, overcutby eager logging companiesand much secondary forest isconverted for crop production,with attendant losses ofbiodiversity. Large cities andrural areas diverge in socialand economic terms as theformer set their sights oninternational standards ofliving while rural areas remainrelatively unchanged. Calls from urban middle classes for environmental protection assert pressureto cease logging and large areas of forest are put under protection with a resulting reduction in woodproduction and decline in the number and availability of rural jobs.Forestry institutions are challenged as demand for forest goods and services increases. In response,efforts are made to ramp up productivity – of both goods and services – through improved regulationand encouragement of investment. In the process, forest authorities are obliged to work with awide spectrum of stakeholders in seeking solutions that balance diverse requirements. Indecisionover long-term plans for forestry mount, however, and more hidebound forestry institutions areforced to reinvent themselves under threat of being outflanked and superseded by environmentalorganizations and rural development actors. A transition develops in which a clear line is drawnbetween the protection and production roles of forests. In some countries, forestry agencieschampion the change while in others their role is diminished. Closer to 2020, caveats in the redefinedroles of forests become apparent as populations increase and zonation of strictly protected areas isundertaken to allow limited production in areas of high demand.In comparison with the Slow and steady scenario, forest resources are less extensive and more highlydegraded, but the hope that rising affluence will make for higher levels of investment in the futureis maintained. The point at which this will occur remains contentious, however, and some begin toquestion the wisdom of a more narrow economic focus in an increasingly unpredictable world.113

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportUncertaintyrecommends thatstrengtheninginstitutionalflexibility should bea key goalThe four scenarios outlined represent a set of possibilities givendifferent prevailing economic and institutional conditions.Unexpected turns could derail the more likely outcomes and divertthe course of events towards a new and unexpected position.Even withstanding radical changes, the different scenarios drawattention to the need for policy and institutional mechanismsto reflect risk by incorporating measures aimed at flexibility andresponsiveness. Contingencies aimed at spreading risk and effortsto invest simultaneously in both long- and short-term goals arelikely to increase the robustness of sector performance. Poorpolicy performance, on the other hand is likely to be detrimentalto sector performance, not just directly, but also through thereduced levels of investment – both social and economic – thatare often associated with volatility. Forestry, with its multipleoutputs – wood, poverty reduction, climate change mitigation,biodiversity conservation and watershed protection – is well suitedto providing benefits under altered circumstances and throughinstitutional responsiveness the performance of the sector is bestguaranteed.The following sections outline what is likely to be seen in 2020 given the most likelyscenarios. Fluctuations in the bottom line between scenarios are most likely to resultfrom poor positioning of forestry within the overall economic framework and scenarioscannot therefore be seen as deterministic predictions of the future under alternateexternal conditions.114

FORESTS AND FORESTRY IN 20205FORESTS AND FORESTRYIN 2020‘Hard times’ and‘Slow and steady’scenarios areconsidered mostlikelyMultiple driverscould promotea transition tosustainabilityThe 2008/2009 economic downturn and its subsequent effectson regional economies and trading patterns suggest that abusiness as usual scenario is unlikely to unfold. In this section thetwo most likely scenarios from the preceding section are insteadconsidered: Hard times and Slow and steady. The key differencesbetween the two scenarios reside in the level of institutionalcommitment to forests and forestry and the capability to turnthat commitment into reality. Slow and steady is a reform scenariowhereas Hard times represents business as usual, or worse, underlow-growth conditions. Both assume that economic growthrates will be constrained in comparison with rates seen over thedecade up to 2008/2009. Policy recommendations outlined inSection 5.6 are proposed measures that, within forestry, wouldact to bridge the gap between the two scenarios.The jump from a Hard times to a Slow and steady scenario parallelschanges that would be involved in a ‘forest transition’ – definedroughly as a reversal in the forest cover trend from negative topositive, but also a transformation to management systemsthat prioritize sustained production of goods and/or services.The stimulus for reforms precipitating forest transitions maydevelop domestically through, for example, growing pressurefrom environmental groups, the influence of environmentalshocks, claims for social and economic justice or through effortsto increase efficiency through greater use of renewables andrecycled goods. A transition could also be promoted throughinternational technical and financial assistance as well as lessformal means of knowledge and technology transfer. Similarly,international measures in relation to trade of sustainably andlegally produced forest products and forest environmentalservices could promote SFM. More broadly, reversals in forestdecline may result from reduced pressure on land, increasingeconomic development and structural shifts in the economy,wood scarcity and policy measures both within and outsideforestry, and particularly in relation to agriculture (Mather 2007).With the objective of providing policy-relevant information for consideration at nationaland subregional levels, the following sections outline what may be expected in relationto forest resources, forest products and forest services.115

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional report5.1 FOREST RESOURCESForest resourcedepletion is thedominant trend inthe GMSForest transitionsare beginning inGMS countriesIn Thailand forestcover loss hasdecoupled fromeconomic growthIn Viet Namplanted forests areexpanding‘Transitions’ havebeen associatedwith export ofdeforestationDemand for land and resources, high economic growth rates andweak governance have led to deforestation and forest degradationacross the GMS. Population movement towards urban areashas had a mitigating effect while growing affluence, along withsocial and cultural development, has increased demand forforest services in several countries. As international markets foragricultural products grow, demand for land from foreign sourcesis posing new threats to remaining forests. Significantly, FAO hasstated that without more land being made available for foodproduction at the global level, many more people will be facingfamine by 2050. 1Forest transitions of different character are, however, beginning inthe GMS despite the overall trend of forest degradation and slowplantation development. Using national forest area as an indicatorand disregarding transboundary displacement 2 of deforestationand forest degradation, it may be argued that transitions aretaking place in Thailand and Viet Nam.In Thailand, forest protection measures implemented two decadesago are taking effect. Trees are also regrowing on abandonedagricultural land and forest area has stabilized despite continuingchanges in variables previously driving deforestation. For example,a doubling of road density in Thailand over the past decade,together with an 8 percent increase in population density, wasassociated with negligible reduction in forest cover (WDI 2010;FAO 2010). Plantations on private land are also expanding but arenot included in official statistics (RFD/DNP 2009).In Viet Nam, forest area is expanding following protectionmeasures, tenure reform and large government reforestationprogrammes. Primary forest area continues to fall, however.Nonetheless, the correlation between road network expansionand overall forest area has been reversed and although roaddensities are high and increasing, forest cover is also rising, albeitattributable to establishment of plantation forests.A similar transition is taking place in China as a result of loggingbans and reforestation programmes enacted in responseto environmental concerns (Mather 2007). In all these casestransitions have been associated with ‘export’ of deforestationand forest degradation to adjacent countries and for this reason itis important to consider regional aspects of SFM.1 Food production ‘must rise 70%’ http://news.bbc.co.uk/2/hi/europe/8303434.stm2 Meyfroidt and Lambin (2009) argue that as a result of progressive logging bans in VietNam, forest extraction equivalent to 39 percent of forest regrowth between 1987 and 2006was displaced to other countries including Cambodia and Lao PDR in the 1990s and then alsoMalaysia, Myanmar and Indonesia.116

FORESTS AND FORESTRY IN 2020Other countriesare in the firststages of forestrydevelopmentTransitions ofdifferent types arelikely to becomemore widespreadAt the national aggregate scale, figures suggest that countriesin the GMS other than Thailand and Viet Nam largely remain inthe first stages of forestry development. Resource extractionand agricultural expansion remain dominant and, in spite ofwell intentioned forest policy, measures to conserve, protectand sustainably manage forest resources have yet to be fullydemonstrated. At the same time, plantation subsectors remainpoorly developed and wood production from areas outside ofnatural forests remains limited.In the longer term, it is likely that forest transitions of one sort oranother will be seen more widely as socio-economic developmentprogresses and measures to promote SFM are strengthened.The qualitative aspects of transitions are likely to differ betweencountries as a result of differing demand balances between, forexample, forest products, biodiversity, carbon and watershedvalues. In some countries forest transitions may, however, notoccur at all due to high population densities, low income anddeteriorating governance (Laurance 2007a). The following sectionspropose what may be seen in 2020 in terms of forest extent andquality.5.1.1. Forest coverForest cover is likelyto fall to 46 percentby 2020If current trends continue, forest area in the GMS will remainconstant to 2020 (Figure 5.1 and Table 5.1.). 3 In Cambodia, LaoPDR and Myanmar forest cover is, however, still falling rapidlyand it remains to be seen if and when long-term slowing in forestconversion and unsustainable logging will take place. In Thailandand Viet Nam, different trends are evident due to a decouplingof the long-term relationship between forest cover and drivingvariables such as population density, agricultural area and roadlength.3 Model projections were based on the relationship between population density and forestcover. Because of differences in the relationships between forest cover and population densityfor different groups of countries, separate models were used to estimate forest cover for: (i)Cambodia, Indonesia, Lao PDR, and Myanmar; (ii) Malaysia and Thailand; and (iii) the Philippinesand Viet Nam. Population density was calculated using medium fertility variant projections fromthe UN Population Division. All models included ‘year’ as an independent variable to accountfor the time series nature of the data and dummy variables were included for each country toallow for absolute differences in forest cover resulting from natural endowment and stage ofdevelopment.117

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportFigure 5.1. Forest area in GMS countries 1990-2020Source: FAO 2010 and FAO projectionsTable 5.1. Forest area in Southeast Asian countries 1990-2020Forest areaProjections1990 2000 2005 2010 2015 2020Cambodia 12 944 11 546 10 731 10 094 9 528 8 839Lao PDR 17 314 16 532 16 142 15 751 15 191 14 736Myanmar 39 218 34 868 33 321 31 773 30 624 29 234Thailand 19 549 19 004 18 898 18 972 19 363 19 934Viet Nam 9 363 11 725 13 077 13 797 15 373 16 875GMS 98 388 93 675 92 169 90 387 90 079 89 618Source: FAO (2010) and FAO projections.Cambodia’s forestswill continue todeclineForest cover loss inLao PDR is forecastto increaseIn Cambodia, projected rates of forest loss are similar to those ofthe past decade, although it is possible that a reduction in the rateof allocation of economic concessions due to the global economicdownturn could reduce rates of forest conversion. Implementationof REDD-related strategies could also slow rates of forest cover loss.In Lao PDR, the rate of forest loss is forecast to increase due tothe comparatively high current ratio of forest cover to populationdensity. Current information suggests that forest conversion islikely to be driven by expansion of agriculture, unsustainableagricultural techniques, road and dam construction, mining andunsustainable logging. Falling government effectiveness and lowvoice and accountability suggest that there will be little impetusto avert these drivers. Current moves to implement REDD-relatedactivities should help reduce deforestation and degradation,although human resource capacity at both national and field118

FORESTS AND FORESTRY IN 2020levels, and overall government effectiveness, are likely to remainobstacles.Forest coverstabilization inMyanmar may besome way offIn Thailand, forestcover is expected toincrease graduallyIn Viet Nam, forestcover is likely toincrease at a highrateIn Myanmar, the lack of a land-use plan and confusion overrights and responsibilities combined with uncontrolled logging,lack of investment or international support and poor politicaland economic conditions suggest that forest cover stabilizationmay be some way off. Sustained demand for timber and teak inparticular, and lack of engagement in REDD also militate againstfuture reductions in deforestation. In general, corruption is likelyto increase in Myanmar due to poor incentives and high ratesof inflation. The government is likely to be forced to rely heavilyon natural resource extraction, although much will depend onpossible government transformations (see Box 5.1; Thaung 2009).In Thailand, the agricultural frontier has, to a lesser or greaterextent, been closed, rural population growth rates are fallingand in association, forest cover is expected to continue a gradualincrease to 2020 (Table 5.1). Despite the current logging ban,forest encroachment remains an issue in Thailand and is likely toremain important due to population pressure at the local leveland demand for land for industrial crop production. Forests are,however, regrowing in different parts of the country on abandonedagricultural land and in areas where shifting cultivation hasbeen eradicated. Short rotation pulp wood plantations are alsoexpanding and are likely to expand further in the future as pastconstraints are increasingly overcome.In Viet Nam, although deforestation and forest degradation ofnatural forests will continue, forest cover is projected to increaseat a high rate as rural population density falls and afforestationprogrammes expand. Forest land allocation is, however, advancingat a slower pace than expected and this may affect forest areaexpansion. The profitability of forest products production andthe size of the forest products industry may also be affected byinefficiencies inherent in allocating small parcels of forest land tomany people. Falling demand or production inefficiencies mayimpact national forest cover expansion given the significance ofplantations in Viet Nam’s forest estate.Box 5.1. The outlook for forestry in MyanmarFor 2020, the following predictions are made in relation to forestry in Myanmar:• Unle ss there is political reform and stakeholder inclusion, Myanmar willlose all opportunity to keep abreast with other developing countries in theregion.• Economic sanctions will affect all sectors and force the government tomaintain heavy reliance on extraction of natural resources, including forestresources.• Forest resources will continue to be depleted unless timber export is wellregulated.119

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional report• Rural people will suffer disproportionately from natural disasters associatedwith climate change, deforestation, forest fire and illegal forest activities.• The good intentions of Myanmar’s Forest Policy will not be achieved withoutinstitutional reforms, significant reinvestment from the government andinternational assistance.• Export of raw logs will remain dominant unless sufficient energy is availablefor development of value-added industries.• Institutional weakness will persist due to militarization and poor prospectsfor professional staff.• Illegal logging, particularly in border areas, will continue unless Myanmar isincluded in regional and international efforts.• Forest governance will remain a challenge, particularly in rebel-controlledareas.• Corruption and lack of transparency in all sectors, including the forestrysector, will jeopardize policy and institutional intentions.• Amidst uncertainty and challenges, community forests will graduallyemerge.Source: Adapted from Thaung (2008).Reversals indeforestationtrends may takemany yearsHigh demand forforest productsand land will slowtransitionsSlower rates ofeconomic growthmust be seen as anopportunityIn the subregion as a whole, lower rates of economic growthare likely to lead to a slowing in forest conversion and forestdegradation as demands on forest resources decline. Conclusionof climate change negotiations and firm commitments to reduceglobal carbon emissions, as well as agreement on REDD, are likelyto lead to progressive reductions in deforestation and degradation.Even with strong international commitment it is, however, likely totake years before deforestation and degradation are slowed dueto low institutional capacity and the need to divert pressure onforests at a systemic level. Preventing leakage of forest degradationto other areas or to neighbouring countries constitutes anotherchallenge that will need to be overcome. Challenges are likelyto be particularly significant in countries with poorly developedinstitutions – where rates of forest cover are often highest.Higher rates of growth in the more advanced Asia-Pacificeconomies are likely to result in continued pressure on forestresources in countries supplying timber and agricultural products.In the case of countries with limited institutional capacityand large remaining areas of forest – Cambodia, Lao PDR andMyanmar – deforestation rates could remain high and under suchcircumstances, international efforts to reduce deforestation andforest degradation are likely to be severely challenged.Under both the Hard times and Slow and steady scenarios it is likelythat deforestation and forest degradation will decline due to lowerrates of demand on land and forest resources. Under the Slowand steady scenario, however, lower rates of economic growthare seen as an opportunity to make long-term investments inenvironmentally and socially focused projects and activities that120

FORESTS AND FORESTRY IN 2020provide a foundation for stable future economic growth. Althoughhaving to proceed on limited budgets, measures such as labourintensivereforestation and forest rehabilitation efforts could havepositive effects on forest resources and future national productionif appropriately managed. Under the Hard times scenario a returnto growth would be likely to be associated with a return tounsustainable resource exploitation.5.1.2. The production and protection roles of forestsAreas of forestdesignated forboth productionand protectionhave increasedPerceived scarcityof forest-relatedgoods and servicesaffects the roles offorestryPlantationproductivity couldbe significantlyincreasedIn past decades, the proportions of forest area designated forproduction and for protection have increased at the subregionallevel as increasingly specific functions have been defined acrossa wider area of forest and the proportion of forest classified forother purposes 4 has fallen. The share of forest designated forproduction in the GMS increased from 18 percent in 1990 to 40percent in 2010, while the area of forest designated for protectionand conservation combined increased from 30 to 42 percent (seeFigs. 2.6, 2.17 and 2.22). Major shifts towards production werereported in Myanmar, while in Thailand and Viet Nam conservationand protection functions became increasingly dominant.Key factors determining the future balance between the productionand protection roles of forests include the forest products supplydemandbalance and the level of forest degradation in relationto demands for environmental protection and related services.Financing for forest protection is also likely to play an increasingrole. In relation, it is commonly observed that the first stage of forestdevelopment – resource extraction and forest clearance – persistsuntil forest goods and services are perceived as becoming scarce.At this stage, efforts are often made to protect forest resourcesand increase production of forest products outside natural forests.Broadly speaking, the efficacy of these efforts is dependent firstlyupon political will, but also on government effectiveness in theface of pressure to continue forest resource exploitation. Wherepressure on forest resources is high and governance is weak, forestresources are less likely to be protected or sustainably managed.The effectiveness of tree plantation programmes as a means toincrease forest products production and protect land and waterresources is commonly related to the extent of degradation ofnatural forests and the effectiveness with which natural forestresources are protected. Currently, the productivity of plantationsin the GMS falls well below potential and the current plantedarea could provide a much higher proportion of the subregion’sroundwood production if optimally managed.4 Social services, multiple purpose, other or no/unknown primary function.121

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportEnvironmentalshocks mayprecipitatechanges in theroles of forestryREDD is likely topromote forestprotectionIncreased forestprotection willhave varyingeffects around thesubregionA ‘Hard times’scenario wouldonly delay negativetrends in forestryA ‘slow and steady’scenario would seeincreases in bothproduction andprotectionGiven the considerable importance of natural disasters ininfluencing environmental and forestry policy in the past – inChina, Thailand and the Philippines for example – future eventsin other countries may elicit similar responses. In combinationwith growing levels of environmental awareness in the subregion,predictions that climate change will lead to more severe floods anddroughts increases the probability of political responses aimed atenvironmental protection.It is probable that international funding to reduce emissions fromdeforestation and degradation will reduce timber productionfrom natural forests in participating countries. Although this couldincrease demand for forest products from plantations, supply fromnon-REDD countries may also increase. Greater forest protectionacross a number of countries could also result in increasingdependence on imports from outside the subregion. AlthoughREDD could also support management of forests for sustainedproduction, this remains a relatively unexplored area.In response to increased forest protection for watershed andcarbon values, the area of natural forests designated for productionmay fall in countries where widespread forest protection measuresare not already in place (Cambodia, Lao PDR, and Myanmar).Countries with better governance are likely to see increasing ratesof plantation establishment and demand from existing woodprocessingindustries is likely to provide further stimulus if naturalforest protection measures become widespread. In Cambodia, LaoPDR and Myanmar, however, governance remains weak and woodprocessing industries are underdeveloped. As a result productionof plantation resources may remain low even if forest protectionmeasures are implemented. In Thailand and Viet Nam, whereforests are protected and plantation expansion rates are higher,increasing demand is likely to raise rates of plantation expansion.Under a Hard times scenario, unsustainable logging and cash cropexpansion rates would fall as a result of reduced demand but, atthe same time, implementation of REDD frameworks could behindered by poor institutional performance and low investment.As such, forests would still be open to renewed threats as demandrecovers. It is also likely under a Hard times scenario that interestin plantation establishment rates would be dampened by lowinvestment and poor investment environments.Under a Slow and steady scenario, economic and institutionalweaknesses will constrain forestry development to a lesserdegree and, even if natural forests continue to be degraded,the role of productive and protective plantations could expandwhere institutional frameworks are supportive. Where forestryagencies fail to meet the new demands on forestry, they could besuperseded by environment agencies if protection- rather thanproduction-related objectives are prioritized.122

FORESTS AND FORESTRY IN 20205.1.3. Forest health and vitalityForest healthand vitality arethreatened innumerous waysUnresponsiveinstitutions willexacerbate thethreatsMonitoringand responsivemanagement arenecessaryThe health and vitality of forests are threatened by stressorsincluding uncontrolled logging, hunting and collection ofNWFPs, fire, spread of invasive species, and outbreak of pestsand diseases. The extent and intensity of these effects is likely toincrease as human influences spread into less accessible areas andthe subregion’s climate changes. The detailed effects of climatechange on forest ecosystems are complex and poorly understood.At the level of organisms and species, changes in temperature,rainfall, wind and humidity are likely to affect many processes –growth, phenology, pollination, seed dispersal, pest and diseaseresistance, etc. Different effects on different species are likely toaffect species’ competitive ability and alter ecosystem compositionand balance in unpredictable ways. For example, climate changemay, in various ways, both disrupt and improve plant defences,and interactions with fire may cause either negative feedbackloops or destabilizing positive feedback loops (Seppälä et al. 2009).Habitat fragmentation and disturbance also opens opportunitiesfor invasive species and reduces the chances of migration ofendemic species. As a result of this complexity, adapting forestmanagement to meet the challenges of climate change is a poorlyunderstood area, but it is generally recognized that maintaininghealthy, expansive and interconnected forest ecosystems willprovide greater opportunity for response and adaptation.Assuming a Hard times scenario where institutions remainunresponsive and inflexible, the effects of climate changecombined with more direct sources of anthropogenic stress –increasing infrastructure development and habitation, logging,widespread use of fire as a management tool and accidental fire,etc. – could prove devastating to the subregion’s forests. A laissezfaireapproach to forest management could lead to the collapseof forest ecosystems across the region similar to the recentlydocumented case in Kalimantan (Curran et al 1999; Curran et al2004). In addition, forest resources could become a net source ofgreenhouse gases if temperature rise exceeds 2.5 o C (Seppälä et al.2009). 5 This outcome will be more rapidly achieved if forest healthand vitality are jeopardized. Under a slow and steady scenario,forest degradation may be brought under control through uptakeof incentives and mechanisms that reward SFM and conservation.In general, there is a need to implement responsive managementsystems and to improve ecosystem resilience. Forest monitoringto quickly detect and tackle outbreaks of pests and diseases,implementation of fire control measures, restoration of forestfunctions after disturbance, reduced impact logging, increases inthe number of locations where particular habitats are managedand efforts to connect habitats and landscapes are all necessary.5 A rise in temperature of 1.1 - 6.4 o C above late twentieth century temperatures is predictedfor Southeast Asia by the end of the twenty-first century (Cruz et al. 2007).123

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportMany of the necessary measures are contained in the concept ofSFM and are frequently compatible with forest-related climatechange mitigation measures. Seppälä et al. (2009) 1 also cite theneed to adopt adaptive and flexible management and institutionalmeasures and take advantages of opportunities as they arise.REDD-relatedmeasureswill improvemonitoringGrass roots actionwill be necessaryto maintain foresthealth and vitalityIn countries developing REDD frameworks (Cambodia, Lao PDR,Thailand and Viet Nam), preparations will include design ofsystems for intensified forest monitoring. Examination of the stateof forest resources in unprecedented detail will provide a muchstronger foundation for developing effective mitigation strategiesand more accurate cost assessments. Monitoring will also providevaluable information for adaptation-related interventions. Foresthealth and vitality in non-REDD countries may receive lessattention unless similar mechanisms are established.In the longer term, and in spite of improved monitoring, manythorny issues will need to be addressed at the field level if SFMis to advance more rapidly. Many of the most pressing concernslie largely outside the control of the forestry sector and therefore,improving the health and vitality of forests may take many years,during which time degradation may be severe. Slow uptake ofSFM in the past, lack of widespread implementation of codes ofharvesting practice and criteria and indicators for SFM, togetherwith fragmentation of protected areas and so forth, suggestthat forest resources in the subregion will change significantlyas the climate changes and human influences increase. Detailedmonitoring of forest resources undertaken through activitiesto prepare for REDD will, however, provide an unprecedentedopportunity to assess status and trends in forest resources andcould act as a turning point in forest-related decision-making.5.1.4. Extent of forest area under sustainable managementDemarcation of apermanent forestestate has stillnot taken place inmany countriesExpansion of SFMdepends on manyfactorsThe main issues defining the future of SFM in the GMS concernrates of natural forest clearance and timber production in naturalforests. Discussion of SFM is most relevant once a permanentforest estate has been demarcated and forest area has beenstabilized. This has taken place to a lesser or greater extent in VietNam and Thailand. In Myanmar, there is no national-level land-useplan and although SFM has been widely practised in the past, thesituation has deteriorated significantly (Tun 2009). In Lao PDR,production forests and conservation areas have been demarcatedbut a protection forest system has yet to be established and forestarea is changing rapidly.Pockets of sustainable management may nonetheless exist,notwithstanding the situation at the national level. Data on theextent of SFM is scarce, but if certified areas are used as a guide itcan be assumed that only a minority of forests are under sustainablemanagement (see Section 2.8). The main determinants of future124

FORESTS AND FORESTRY IN 2020expansion in the area of forest under sustainable management in2020 include:• Demand for products from sustainably managed forests.• Political will to improve social and environmental aspects offorest management and economic sustainability.• Technical and management capacity to implement sustainablemanagement.• Economic viability of secondary natural forest to be profitablymanaged for production given past high grading andalteration of species composition following logging.• External financing for sustainable management.Increased demandfor sustainablyproduced productsmay be on thehorizonEconomic andhuman resourceconstraints mayyet limit SFMexpansionA ‘Hard times’scenario willundermine SFMIncreases in demand for products from sustainably managedforests depend to a large extent on consumer requirements and theexistence of appropriate systems of verification. Recent experiencesuggests that although certification provides an incentive for SFMin terms of market access, a price premium has not always beenavailable. As market chains evolve, corporate buyers enact ‘green’procurement policies and public procurement policies proliferate,it is likely that market links will strengthen and premiums will grow.International measures to promote trade in legal and sustainablyproduced products are also likely to play a leading role. A recentpoll has shown that European citizens overwhelmingly wantstricter controls on illegally sourced timber and legislation isunder development and should be implemented in the comingyears. 5 Implementation of measures associated with the US LaceyAct and similar legislation in the EU will be particularly important(see Box 3.3).In several countries, capacity to manage forests sustainably maybe lacking despite political will. Constraints are most severe inthe least developed countries where governance is weak andillegal logging is widespread. In areas where commercial speciesare found at lower density and/or forest growth is less vigorous,the economic viability of production is likely also to imposesignificant constraints. This is particularly true for areas that havebeen degraded in the past by destructive logging. Overharvestingand high grading, multiple re-entry to logging coupes as demandfor new species has risen, and lack of implementation of reducedimpact logging techniques have all reduced the value of forests inthe subregion. ‘Recapitalization’ of forest resources in many areaswill require active rehabilitation efforts and protection beforeproduction can resume.Under a Hard times scenario, it is likely that hopes of implementationof sustainable management across large areas of forest will beconstrained for the following reasons:• Technical complexity in the face of institutional weakness;5 Massive majority want EU timber law (http://www.panda.org/wwf_news/?160821/Massivemajority-want-EU-illegal-timber-law).125

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional report• Lack of economic viability due to the proliferation of secondarytree species following past rounds of uncontrolled logging;• Reductions in governance standards and lack of donorsupport; and• Continuing apathy of business-government coalitions inregard to SFM.Under this scenario, sustainable management of natural forestsfor production is likely to take place almost exclusively in projectsupportedmodel forests. Without widespread institutional reformand strengthening, REDD implementation will also come upagainst the same non-financial obstacles that have constrained thespread of SFM in the past – overlapping jurisdictions, land tenureissues, conflicting claims, low law enforcement and governancecapacity and limited technical capacity, etc.Even withinstitutionalimprovements SFMwill need externalfinancingUnder the Slow and steady scenario, SFM will be less constrained byexternal financing and forestry-based responses to environmentalshocks and social justice claims have a better chance of beingimplemented. Under these conditions, SFM may expand in somecountries, but only with external financing due to the reducedeconomic viability of secondary forest for production. In theless advanced countries and provinces in the subregion, deeplyentrenchedsocial issues and insurgency may, however, forestalleven the most concerted efforts to institutionalize sustainability.5.2. WOOD AND WOOD PRODUCTSEconomicconditions willdetermine trendsA continueddownturn couldsignificantly reduceproductionWood and wood products markets are significantly affected bythe global and regional economic climate. The effect of the globaleconomic downturn on forest products markets in the GMS hasbeen substantial and industry may struggle to cope with lowdemand and price volatility in the longer term.The 2008/2009 global slowdown initially resulted in steepreductions in demand from outside, as well as within the subregion– as happened following the 1997/1998 crisis (see Box 2.5). Ifthe current economic rebound is not sustained, the sawnwood,plywood, pulp and paper and furniture industries in Viet Namand Thailand are likely to further suffer. Falling investment inconstruction is particularly likely to impact the sawnwood andfurniture industries and investments in paper production are alsolikely to be curtailed. A lack of new investment could also threatenthe long-term future of the wood products industry as technologybecomes outdated and comparative efficiencies decline. In thelonger term, exchange rate fluctuations could affect the positionof producer countries. Weaker currencies will attract more foreigncustomers but investment accumulation will be limited and nocompetitive advantages will result (Sasatani 2009).126

FORESTS AND FORESTRY IN 2020A rebound couldresult in resourcedepletion ifsustainability is notprioritizedInternationaltrade restrictionswill have pivotaleffects...A sustained economic recovery is likely to result in increasedwood production, but further depletion of natural resources willeventually reduce the competitiveness of forest-rich countries. Inthe medium term, inflation could also reduce the competitivenessof major forest products producers through rising wages, utilityfees and raw material costs (Sasatani 2009). Additionally, underconditions of rapid economic growth, shrinking labour forces inrural areas could lead to reductions in wood production.Trade restrictions in high-paying markets outlined in the previoussection are likely to have pivotal effects on forest products marketsin the GMS if fully implemented. In relation, Table 5.2 shows thevalue of trade flows that could be affected by the EU and theUSA legislation. The EU and the USA account for 4.9 percent ofGMS exports of major forest products by value (US$2.3 billion).Countries in the GMS exporting wood to manufacturing centresin, for example, China could also be affected where products aredestined for re-export to the EU or the USA.Table 5.2. Value of GMS exports of major forest products 6 to the EU and theUnited States, 2007ReportingcountryValue(000 US$)USA EU Total value% of totalforestproductstradeValue(000 US$% of totalforestproductstradeof exports(000 US$)Cambodia - - - - 14 776Lao PDR - - 725 0.9 77 480Myanmar - - 35 993 9.3 385 686Thailand 20 028 1.3 38 856 2.4 1 592 101Viet Nam 15 229 6.7 1 494 0.7 225 963GMS 35 257 1.5 77 068 3.4 2 296 006Source: FAO (2009); FAO (2008c)....the furnituretrade is particularlyvulnerableBy value, 75 percent of total wooden furniture exports from theGMS went to the EU and USA markets in 2007 (US$2.6 billion; Table5.3). The total value of exports of wooden furniture from GMS rosemarginally from US$3.6 billion to US$4.0 million between 2007and 2008, having previously jumped by 35 percent from 2005 to2007. The most significant exporter is Viet Nam, which accountedfor 79 percent of the subregion’s total exports to the EU and USAin 2007. To maintain these flows, exporting countries will need toaddress legality concerns with great rapidity.6 Industrial roundwood, sawnwood, wood-based panels, woodpulp and paper and paperboard.127

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportTable 5.3. Value of EU and USA imports of wooden furniture from GMScountries, 2007ExporterValue(000 US$)USA EU TOTAL% ofwoodenfurnituretradeValue(000 US$)% ofwoodenfurnituretradeValue(000 US$)Cambodia 21 6.7 133 42.5 312Lao PDR 13 1.0 29 2.2 1 307Myanmar 0 0.0 7900 69.2 11 424Thailand 346 411 38.3 212 547 23.5 904 348Viet Nam 1 313 516 48.9 810 501 30.2 2 687 882GMS 1 659 960 46.0 1 031 110 28.6 3 605 273Source: UN Comtrade 2010 (importers as reporting countries).5.2.1. Production, consumption and trade of forest products 7With highgrowth ratesforest productsproduction will riseProduction forecasts for the major wood products groups forthe GMS according to a baseline projection are shown in Figure5.2 (see Box 5.2 for note on forecasting assumptions). Industrialroundwood production is projected to increase in line withdemand while sawnwood production would increase at lowerrates as supplies of larger logs become limited and processedboard types become more widely used – in accordance with pasttrends. Woodpulp and paper production is expected to increasemore rapidly in response to population growth and increasingrates of literacy. Difficulties with plantation establishment andincreased protection of natural forests could, however, disrupt thistrend as could measures to introduce or increase levels of paperand fibre recycling.Box 5.2. Forest products production, consumption and trade forecasts – keyassumptionsProjections of wood products production and consumption have been preparedbased on statistical analysis and modelling of historical data about forestproducts production and consumption (Jonsson and Whiteman 2009). Theforecasts presented in this section must be viewed in the context of the followingassumptions:1. Continuation of economic growth on the basis of trends in evidence prior tothe 2008/2009 economic crisis. The downturn scenario assumes growth ratesare 25 percent lower than those projected prior to the economic crisis.7 This section shows projected trends in wood products production for the GMS (Jonssonand Whiteman 2009). Figures for all countries under baseline and downturn scenarios areshown in Appendix II.128

FORESTS AND FORESTRY IN 20202. The forecasting model does not include possible future resource constraints andoutput does not therefore explicitly take into account declining natural forestresources.3. The forecasting model does not include possible future policy interventions suchas forest protection measures, changes in international trading regimes, etc.Given these assumptions, the forecasts could be realized if a sustained economicrebound comes about, if resource constraints do not appear, or if there are nosignificant policy changes affecting forests and forestry in the next decade.Figure 5.2. Projected wood products production in Southeast Asia to 2020Note: Industrial r oundwood, sawnwood and panels are shown in cubic metres, woodpulp andpaper in tonnes.Source: Jonsson and Whiteman (2009).A downturn isexpected to affectLao PDR andCambodia mostseverelyPaper and paperboard will behardest hitChanges ininternational traderegimes may havehuge effects onwood productsmarketsUnder a downturn scenario, with growth rates 25 percent belowthose assumed under the high-growth scenario, overall levelsof production and consumption of wood products in 2020 areexpected to be between 10 and 20 percent below the baselinescenario. Production and consumption in Lao PDR and Cambodiaare expected to be most affected, with reductions in comparisonwith the baseline of around 20 and 35 percent respectively by 2020.In other countries, reductions of 10 to 20 percent are forecast.Production and consumption of paper are expected to be harderhit by a downturn than other products, while panel consumptionis expected to decline more than production given that exports tocountries with higher rates of economic growth would continue.Even with a rapid return to high rates of economic growth,legality-related regulations aimed at imports of wood to EU andUnited States markets may significantly alter trade flows. Publicprocurement policies and corporate decisions are likely to havesimilar effects. With a large proportion of higher value-addedproducts destined for these markets being manufactured in129

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportIndustrial roundwooda few key countries with wood sourced in low-income resourcerichcountries, the leverage of such measures on regional tradeis immense. Both producer nations and intermediate processingcountries are likely to be significantly affected where capabilitydoes not exist along the market chain to meet legality andsustainability requirements. Under such circumstances, producersand manufacturers will need to find new markets either withinor outside the region. Even where manufacturing is sustained,margins are likely to fall as a result of movement to lower payingmarkets.Industrialroundwoodproduction mayriseUnder the baseline scenario roundwood production is expectedto increase (Figure 5.3). Net exports (production-consumption)are expected to increase slowly to 3.7 million m 3 or 13 percentof production in 2020. Under the downturn scenario, productiongrowth is expected to fall from 2.7 to 1.7 percent per annum (seetables in Appendix 2). These forecasts could, however, easily bediverted from if forest protection measures proliferate as a resultof climate change-related agreements or environmental shocks,if international trade regimes change significantly or if there iswidespread exhaustion of forest resources.Figure 5.3. Production and forecast production of industrial roundwood in GMScountries, 2000-2020Source: Jonsson and Whiteman (2009).SawnwoodSawnwoodproduction mayalso rise but thereis little certaintySawnwood production in the GMS is forecast under the baselinescenario to increase at 3 percent per annum between 2010 and2020. Most of the increase up to 2020 8 is expected to come fromViet Nam, while smaller increases are also forecast in Thailand and8 Sawnwood data reliability has been problematic in the past and forecast increases inproduction may partly reflect underreporting.130

FORESTS AND FORESTRY IN 2020Lao PDR (see Appendix 2). Significantly, Thailand’s net importsare expected to increase from just over half a million cubic metresin 2005 to almost 3 million in 2020 and imports to Viet Nam arealso forecast to increase (Jonsson and Whiteman 2009). Under thedownturn scenario, lower annual rates of increase in productionare expected due to reduced demand.Figure 5.4. Production and forecast production of sawnwood in GMS countries,2000-2020Source: Jonsson and Whiteman (2009).Wood-based panelsPanel productionin Malaysia isexpected to riserapidlyFibreboard andparticle boardproduction is likelyto grow fastestProduction of wood-based panels is expected to increase in GMScountries by 2020 with around 76 percent of the increase comingfrom Thailand and 20 percent from Viet Nam (Figure 5.5). Overall,panel production is forecast to increase at a faster rate thanindustrial roundwood or sawnwood production. Surplus panelproduction in the GMS is expected to increase by around 200,000cubic metres between 2010 and 2020. Almost all of this expectedincrease is accounted for by Thailand, where panel productionhas been growing rapidly in recent years. Under the downturnscenario, slower expansion in production is expected althoughnet exports are not expected to change significantlyWith respect to the mix of panel types, it is likely that due toreductions in the availability of large logs, plywood will loseground to more processed board types such as fibreboard andparticle board (Sasatani 2009). With respect to these board types,the competitiveness of the furniture industry, especially in relationto labour cost inflation, is likely to be central. If rates of economicgrowth remain high, manufacturers are likely to move to countrieswhere labour costs are lower with resulting repercussions on thewood-panel industry (Sasatani 2009).131

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportFigure 5.5. Production and forecast production of wood-based panels in GMScountries, 2000-2020Source: Jonsson and Whiteman (2009).Paper and paper boardPaper productionis forecast to slowbut much dependson economicconditionsPaper and paperboard production growth is forecast to slow - from9.8 percent per annum between 2000 and 2005 to 5.0 percent perannum between 2010 and 2020. Most of the increase in productionis expected to be in Thailand with smaller increases in Viet Nam.Economic growth and increasing levels of education will mean thatconsumption in the region will increase in line with production.Under the downturn scenario, production growth between 2010and 2020 is expected to be lower due to reduced demand andlower levels of investment in new pulp and paper productionfacilities. Reductions in production can also be expected if paperrecycling becomes widespread due to increasing environmentalawareness and increasing availability of “green” products.Figure 5.6. Production and forecast production of paper and paperboard in GMScountries, 2000-2020Source: Jonsson and Whiteman (2009).132

FORESTS AND FORESTRY IN 20205.2.2. Overview of the future forest products supply-demand balanceFuture forestproductsproduction is in thebalanceResourceconstraints may bedecisivePlantationexpansion holdspromise forincreasing supplyGreat effortwill be neededto maintaincompetitivenessin forest productsproductionThe future of forest products production in the GMS is very muchdependent on investment and the market and policy environment,including such factors as demand, resource availability,management competency, investment conditions, and energyand labour costs (Sasatani 2009). Governance factors are likely toplay a key role, and with falling standards of governance in mostof the subregion during the past decade the outlook is mixed atbest (see Section 3.6.1). Without significant alteration, the nextdecades may witness a decline in all forms of industrial activity,including forest products production.Resource limitations are likely to constrain supply associatedwith future market growth and limit expansion of exports toChina and other countries. Katsigris et al (2004) estimate thatalthough Thailand, Viet Nam, Lao PDR and Cambodia have verylittle remaining supply, and Myanmar, PNG and Malaysia willprobably exhaust supplies by 2015-2020, the Russian Far East hasover 20 years of timber remaining – notwithstanding catastrophicfire, which has caused great damage in the past. It is thereforeprobable that towards the end of the time horizon of this outlookstudy, sources of wood supply will move outside the subregion.Although increased demand for wood products is unlikely tobe met through sustainable management of natural forestsfor production, resource constraints and anticipated increasesin forest protection could stimulate expansion of plantationresources. Plantation expansion and productivity in Thailand andViet Nam – the main investors in industrial plantations in the GMS– have, however, been slowed by numerous impediments in thepast.It is likely that the forest products industry in the GMS will alsobe affected by growing international concern over sustainableresource management (see Box 3.3). Buyers may even turn awayfrom tropical timber products altogether due to the reputation oftropical forest management and preferences for lighter colouredwoods. Slumps in EU imports may result in restructuring ofthe wood industry, which could have lasting adverse effectson tropical producers (ITTO 2009h). Sustained high levels ofeconomic growth in China could avert a fall in demand, althoughthe competitiveness of sections of the GMS forest productsindustry may fall due to supply constraints and lack of investmentin technology. The propensity for domestic processing in Chinaand associated low wage rates may also challenge less efficientforest products producers in the GMS.133

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional report5.3. NON-WOOD FOREST PRODUCTSNWFPs and theirassociated marketsface an uncertainfutureMany barriersinhibit sustainablemanagementDepletion of wildstocks is likely tocontinueAttention shouldbe given toproducts for whichthere is greatermarket demandWith widespread transition from subsistence to market-basedeconomic systems across the subregion, many NWFPs and theirassociated markets face an uncertain future. A vast number ofproducts with a wide array of uses provide essential contributionsto the livelihoods of many people in the subregion. On the otherhand, many functionally equivalent products are already availablein mainstream markets and inferior products are unlikely to beaccepted. Transition between subsistence and market systems willrequire selection of NWFPs that have potential for cultivation andcommercialization. At the same time, unsustainable exploitationof NWFPs may occur through commercialization, depletingresources available for subsistence and removing NWFP valuefrom the overall value of the forest (e.g., FAO 1998; Angelsen andWunder 2003).Despite a high dependence on NWFPs among forest users, manybarriers inhibit sustainable management and income generationincluding tenure security, lack of processing skills and limited marketaccess (CFI 2006). For product markets to expand, domesticationand intensification of production will be necessary to improveproduction efficiency and stability, allow investment and generaterevenue. Low profits are, however, a frequent constraint. Thediversity of NWFPs, the unique and divergent ecology of differentspecies and the need for relatively sophisticated techniques andinstitutions for successful management mean that only someproducts are likely to become more widely marketed while otherswill remain minor products.Overall, a trend of depletion and unsustainable management ofNWFPs paralleling the general situation in forest managementis likely to continue without concerted efforts to improvemanagement systems. Under a Hard times scenario, commercialdemand for NWFPs is liable to fall while subsistence consumptionrises. Higher rates of economic growth without improvedperformance are likely to result in depletion of NWFPs to a greaterextent. A Slow and steady scenario could see improvements insustainable management and economic benefits. Comprehensivelyaddressing NWFP development at the national, provincial andlocal levels is one way to safeguard social and environmentalvalues associated with this diverse group of products as marketsexpand (see Box 2.7).From an economic angle, promotion of NWFPs could yieldsignificant local level benefits and, in this respect, attentionshould be focused on domesticating species for which there ismarket demand (FAO 2002). To support sustainable production,access rights to forest products must be established and strategicdevelopment of NWFPs is necessary, with increased focus onbuilding market links, cost benefit analysis and private sectordevelopment (Warner et al. 2008). Promotion of forest products134

FORESTS AND FORESTRY IN 2020that are abundant and available in the long term is likely to yieldgreater success. Perhaps most importantly, entrepreneurial activitywill be necessary for NWFP development given the difficulty ofcentrally managing such a vast array of diverse products. Wherespecies are not domesticated, many of the challenges facing SFMand wildlife conservation will have to be overcome for sustainedproduction to be a realistic possibility. In many countries the levelof institutional development required may forestall sustainablemanagement and the falling quality of governance in manycountries is likely to hinder implementation of frameworkssupporting sustainability (see Section 3.6.1).5.4. SERVICE FUNCTIONS OF FORESTSProduction ofenvironmentalservices fromforests is likely tofallForest biodiversitywill remain underthreatWith a forecast 0.9 percent reduction in forest cover in the GMSregion by 2020, the overall production of forest services is likelyto be reduced. On a qualitative level, reductions in health andvitality due to overharvesting, substitution of primary forest withplantation forest in the national forest estates, fire and pestsand diseases will similarly reduce production of services. Poormanagement of protection forests and increasing encroachmentinto protected areas in many countries in the subregion suggestthat a reduction in rates of loss of forest services is the most positiveoutcome that can be expected (see Sections 2.4.1 and 2.4.3).The balance between demand for environmental services anddemand for land and forest products will play a key role in thefuture production of forest services and it is increasingly likelythat international mechanisms will support production ofenvironmental services. At the same time, population growth andeconomic development will lead to increasing pressure on forestsand forest land.5.4.1. BiodiversityProtected areasmust be supportedat all levelsProtected areas have been cited as “the main hope for biodiversityconservation” (Sodhi et al. 2004). The remoteness and porosityof protected areas and their frequent location in border areas,however, makes biodiversity conservation a multinational andmultidisciplinary issue. Key factors determining the futureeffectiveness of protected areas in forest biodiversity conservationinclude:• Financing and budget allocation – particularly in relation tostaffing and management planning;• Law enforcement in relation to collection and trade of timber,NWFPs and wildlife;• Control of access and prevention of encroachment;• Monitoring and evaluation;135

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional report• Awareness and education – particularly among consumers;• Sensitivity in road placement and development activities.The future holdsboth threats andopportunitiesMuch rests oninstitutionalperformanceEven withinstitutionalcommitmentthreats will remainSeveral factors will contribute to these efforts in coming years –improved forest monitoring and financing in association withREDD efforts and growing levels of awareness and increasingeffectiveness of wildlife enforcement networks. There are alsogrowing threats – increasing purchasing power of consumers ofwildlife and NWFPs, expanding road networks in sensitive areasand falling governance standards in much of the subregion (seeSection 3.6.1).Under the Hard times scenario the future for forest biodiversitylooks bleak. Although low rates of economic growth will reducedemand for products, including wildlife and timber, increasingpoverty is likely to increase reliance on wildlife and forest resourcesfor subsistence needs. Failing governments and weak civil societywill be hard pressed to stem the tide. Trends in governance,economic growth and infrastructure developments suggest thatimpacts in Cambodia, Lao PDR, Myanmar and Viet Nam would bemost severe. As primary forests are exploited, the role of secondaryforests in biodiversity conservation would be expected to becomemore significant.Under the Slow and steady scenario, a better outlook can be foreseenwith virtuous circles developing as institutional commitmentbrings increased international funding. Even with institutionalcommitment, however, pressures for land development anddemand for forest products and wildlife may be difficult to controlas major development projects are undertaken.5.4.2. Forests and climate changeImplementationof standard SFMpractices willimprove climatechange resilienceThe potential effects of climate change on forest ecosystemsare poorly understood and are likely to alter ecosystem balanceand composition in unpredictable ways. Uncontrolled logging,hunting and collection of NWFPs, fire, drought, invasive species,and pests and diseases, will all impose additional stress on forests.Without appropriate interventions, it is possible that the effects ofclimate change acting in concert with these pressures will provedevastating. Management to help forests adapt to climate changewill involve maintaining forest health and ecosystem diversity andresilience as well as implementing systems for monitoring andresponding to changes. Much of what is likely to be necessaryis contained within standard practices for SFM (Broadhead et al.2009). Uncertainty and slow implementation suggest, however,that the near-term future for sustainable management of naturalforests in the GMS is not assured. Advances may depend more onthe rate at which wider socio-economic development proceedsthan the direct effectiveness of forestry-related efforts.136

FORESTS AND FORESTRY IN 2020Climatechange-relatedmechanismsprovide the besthope but success isfar from assuredSignificantadvances will benecessary for REDDto be successfulEstablishment ofREDD frameworkswill nonethelessprovide significantadvancesConcerted effortsare necessary forsynergies betweenclimate changeefforts and forestryto be realizedThe greater inclusion of forestry in international climatechange mitigation and adaptation arrangements will providegreater support for forests and forestry if effective methods ofengagement with the sector and related sectors can be found.In relation, challenges to implementing REDD are likely to besubstantial in many countries. In particular, implementation ofnational monitoring and implementation frameworks may entailmeasures that will conflict with other existing priorities andsensitivities in the same way that past measures to better controlforestry have done in the subregion. Additionally, many of themost pressing concerns lie outside the control of the forestrysector, e.g., competing claims and conflict among social groupsand between urban and rural people; trade-offs between foodproduction and environmental protection; conflicting demandson forests; cronyism and endemic corruption; weak capacity, lackof political commitment, etc.Leakage of emissions through displacement of deforestationand degradation and substitution of wood with other materialsconstitutes another serious risk to REDD – and in turn to forestconservation. In many countries, controlling leakage at thenational level will require unprecedented levels of coordinationbetween government agencies with forestry sector involvement.Gaps in information and separation of institutional jurisdictionsin relation to timber removals, forest conversion/clearance andwood products production and trade constitute leakage risksthat could significantly undermine REDD. Without significantadvances in institutional capacity and coordination it will not bepossible to implement sound national-level REDD strategies inmany countries and many years of effort will be required beforestandardized implementation frameworks embedded withinnational institutional frameworks can be expected.Notwithstanding achievement of overall goals of REDD efforts,there will be many points along the way at which opinions willbe formed and reformed as issues are confronted in detail. One ofthe most interesting areas of REDD preparations will be intensifiedforest monitoring. Examination of the state of forest resources inunprecedented detail will provide a much stronger foundation fordeveloping effective mitigation strategies and more accurate costassessments. Monitoring will also provide valuable information foradaptation-related interventions.The situation with respect to forests and climate change in2020 is closely related to overall progress towards SFM andimplementation of plans that strive to maintain forest healthand vitality, reduce risk, prevent forest degradation, maximizeproductivity, etc. Although a turning point for forestry may beclose at hand for a few countries, far more effort will be requiredto redirect the pressures to which forestry is currently exposed inmany others. This will require significant inputs, not only at thenational and international levels, but especially at the field level –137

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional report5.4.3. Forests and waterand not only in forestry, but also in related sectors where action toreduce pressure on forests is most needed.The contribution offorest to watershedprotection willremain variedMuch depends onpolicy changesin response toenvironmentalshocksThe total area of forest with protection as a designated functionvaries greatly across the subregion (Table 2.9). In general,protection forests in the subregion are poorly protected andmanaged, although sea changes in forest policy have takenplace in a number of countries as a result of events linked toremoval of forests and loss of associated protective functions.The degree to which forests are physically implicated in changesin the qualitative and quantitative aspects of hydrology has beenquestioned, but public and political opinion often strongly linksperceived or actual environmental changes to changes in forestcover (see Section 2.4.3).By 2020, it is likely that forests will play a larger role in relationto links with hydrological processes. For example, it is likely thatclimate change-related increases in the frequency and severity ofstorms and increased road building in sloping areas are likely toresult in increased incidence of landslides in the subregion (seeBox 2.12). Such events could trigger measures to protect forestsin sloping areas. Past indications in Asia suggest that this willtake place through regulatory measures rather than paymentsfor water-related services. It is likely that changes will be seenin countries where measures have yet to be taken and whereprotection forests are poorly managed and topography is steep.As such, changes in the role of forests in watershed protection aremost likely to be seen in Lao PDR and parts of Indonesia.5.5. WOOD AS A SOURCE OF ENERGYTraditionalwoodfuel use willfallWood energy has widely differing systems of production anduse and there are likely to be a range of responses to economicgrowth, demographic changes and shifts in energy policy in thesubregion. With respect to traditional woodfuel use, falling povertyand increasing distribution of alternative forms of energy in thesubregion make it highly likely that consumption at the nationallevel will fall in coming years. More broadly, factors associatedwith climate change, energy efficiency and energy dependencyat the national level will play a central role. In addition, there isan array of ecological, economic and social issues that will comeinto play. In general, the contribution of forestry to future energyproduction will be influenced by:• The competitiveness of wood-based energy in reaching theobjectives of recent energy-related policies;• Availability of alternative sources of energy;138

FORESTS AND FORESTRY IN 2020• The costs and benefits of wood energy-related systems insocial, economic and environmental terms; and• Policy and institutional issues that provide the frameworkwithin which forestry acts.Commercialwood energy usetrends dependon technologicaldevelopmentsIt is accepted that a major shift in the importance of woodenergy will follow the development of economically competitivetechnology for production of liquid cellulosic biofuels. At thatpoint, forest products will compete directly with agriculture for ashare in the biofuels market. Forest products will also become asource for transport fuel and, as such, large markets where energyconsumption is significantly affected by policy measures (e.g.,the EU, USA) will potentially fall open to forest-derived energyfrom developing countries around the world. Where trees are notfavoured for biofuel production, the contribution of forestry toenergy production may be more confined to efficiency gains incurrent uses and the increased use of wood residues from existingforestry operations. Under these conditions, wood consumptionfor bioenergy production will be less controlled by energymarkets than by trends in roundwood production, extent of forestresources and demands that compete for wood residues.5.6. OVERVIEW OF FORESTS AND FORESTRY IN 2020Deforestation andforest degradationwill continue atlower ratesForest productsproduction willgradually declineIn 2020, forests and forestry in the GMS will have evolvedconsiderably. The extent and quality of forest resources will havedeclined, although at slowing rates, and only in remote andinaccessible areas will large tracts of primary forest remain. In somecountries, almost all forests will have been degraded by loggingand hunting. In others, particularly higher income countries,protected areas will provide the mainstay for biodiversity. Inlower income forest-rich countries, although pockets of primaryforest in protected areas will remain, this may be more throughremoteness than enforcement of management plans. Throughoutthe subregion, wildlife and prized species will be severely depletedas access to remote forests increases and markets grow. Protectionforests will remain under threat from growing populationsmoving into more marginal areas, although environmental shocksand increasing incomes may mean that greater effort is put intowatershed management with forests playing a leading role.Planted forests will be more widespread in countries whereinstitutional frameworks are better developed and governance isstronger. Traditional tenure rights will continue to stall expansionof large-scale plantations in many countries and allocation ofland to smaller local units will also mean that economies ofscale are interrupted. With increasing wage rates, decliningsupplies of wood from natural forests and slow rates of plantationdevelopment, main centres of forest products production will139

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reporthave moved outside the subregion. Some countries may maintaintheir positions where competitive advantages can be created, butvolumes are likely to fall and imports from, for example, China mayincrease.REDD will play anincreasing roleSFM in naturalproduction forestswill struggle to takeholdManaging anefficient transitionto forest protectionis a primary goalUnder these circumstances, international trade regimes will havewaning influence on forest management in the GMS towards2020. Closer to the Outlook time horizon, however, internationalforestry-related climate change mechanisms and financingwill become more fully functional and as rural land conversionrates slow and institutional jurisdictions become clearer, greaterpossibility will exist for investing in forestry for climate changemitigation. Until that time, REDD is likely to be used as a means ofincreasing funding for protected areas and community forestry. Atthe same time, REDD-funded improvements in forest monitoringcould have a pivotal effect on forestry as resource statisticsbecome available in unprecedented detail and buyers and sellersof environmental services are able to trade with a much greaterdegree of accuracy and certainty.Overall, SFM will not be widely practised in terms of managementof natural forests for production. Most countries in the subregionwill focus on plantations for wood production while, at leastnominally, placing many natural forests under full protection.Although exclusion of vested economic interests may result in slowdegradation of protected natural forests due to illegal logging andencroachment, the technical, economic and ecological difficultiesof sustainably managing natural tropical forests for timberproduction will mean that such management is only seen in a fewmodel forests.The main question will be whether a transition from productionforestry to forest protection can, with international support, beefficiently managed or continued in GMS countries. Wood willcontinue to be in great demand as will land. The best that canbe hoped for is a more efficient forest sector producing moreand higher quality goods and services from reduced areas. Highproductivity plantations, secure species-rich protected areas,efficient forest products production and protection forests in theright places will be goals that will truly be worth achieving.140

BRINGING ABOUT CHANGE6BRINGING ABOUT CHANGEConsensus over theposition of forestryis greatly neededForestry reformsare gaining widersupportWithout broad agreement over forestry objectives, andimplementation of supportive policy and legislation, forestrywill remain at the mercy of a wide range of vested interests andbusiness as usual can be expected. While international actorshave promoted forests and forestry as a means of sustaininglivelihoods, generating income and maintaining environmentaland biodiversity values, de facto policies of resource extractionand forest conversion have been pursued in several countries.Low economic returns and lack of financing have been majorfactors in determining the priority afforded forests within nationalframeworks. Recent growth in national and international interestin forestry and the environment could, however, provide thenecessary stimulus for widespread transitions in GMS forestry.A major factor determining the future of forests and forestryis the extent to which institutions are able to rise to meet thischallenge. On the positive side, lower rates of economic growthin comparison with the past decade are likely to reduce pressureon forest resources and provide space to implement naturalresource management reforms. Making long-term investmentsin forests and forestry can potentially provide future supplies offorest products to support manufacturing as economies reinflate;improve watershed protection as the region’s climate changes;reduce CO 2emissions and associated credits; and providerecreation opportunities and a treasure trove of wild plants andanimals to add perspective and pleasure to the lives of futuregenerations.6.1. PRIORITIESIncome generationand protection ofbiodiversity havebecome clear goalsIn supporting a transition from net forest cover loss to netforest cover gain and from unsustainable to sustainable forestmanagement, priorities need to be set. Within the GMS overalldevelopment framework, prevailing economic and demographictrends and national-level priorities suggest that forestry-relatedgoals should centre on:» economic production; and» biodiversity protection.Trade-offs between these objectives should be carefully monitoredand controlled, and as such a third cross-cutting priority is:» improved governance.141

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportBox 6.1 outlines arguments for focus on these areas in the contextof wider socio-economic development and pursuit of foresttransitions.Box 6.1. Priorities during forest transitionsExperience has shown that the transition from traditional forest-based livelihoodsystems to sustained management of forest for timber production is far lessfrequent than to agriculture-based systems in which the role of forests is morelimited. At the same time, rural-urban migration rates are increasing and low returnson agricultural and forest-related production have reduced the attractiveness ofrural livelihoods. Wider changes from subsistence to market orientation, of whichthese transitions are a part, are, however, increasingly seen as the primary routeto poverty alleviation, revenue generation and environmental protection. Thus,there is growing recognition that long-term forestry benefits may be best realizedthrough rapid socio-economic development, poverty alleviation and improvedgovernance – itself supporting the contribution made by the forestry sector(Persson 2003).In the medium term, a proportion of forests will be converted to alternative usesthat, paradoxically, may be unsustainable. It is, however, generally recognized thatmore affluent societies can better afford non-commodity forest values than thosewhere weak governance, shortages of alternative livelihood options or developingeconomies place excessive demands on natural capital (e.g., Lanly 2003). Adoptingthis overall scenario demands greater focus on two distinct long-term goals:generating benefits from forestry that contribute to mainstream developmentand preserving that which cannot be recovered, i.e., biodiversity and associatedecosystem services. Cutting across these objectives, strengthening forest lawenforcement and governance is essential to support efficient functioning ofinstitutional frameworks and to protect vulnerable forest resources.Source: Adapted from Broadhead (2006).Forest transitionswill be the definingchallenge forforestry to 2020With the advent of international mechanisms to finance theenvironmental externalities associated with forestry, and greaternational awareness of the importance of forestry, the reality oflinking environmental conservation and income generation isdrawing closer. Even without international financing, severalcountries in the subregion are beginning forest transitionsand demonstrating approaches that could be more widelyimplemented. Mustering the political will, human resources,technical know-how and necessary financing to effect widespreadforest transitions is likely to become the defining challenge forforestry in the GMS to 2020.142

BRINGING ABOUT CHANGE6.2. STRATEGIESThe right strategieswill help averta ‘Hard times’scenarioGiven that economic growth rates in the coming decade arelikely to be below those of the past decade and assuming thatinternational financing will remain available for improved forestmanagement, a range of strategies to improve the performanceof forestry are set out below. By implementing related measuresa future of Hard times may be steered towards Slow and steadysustainable development. In various ways, each strategycontributes to the overall priorities of economic production,biodiversity conservation and governance reform and togetherto a lesser or greater extent a part of moving towards ecologicalsustainability and green development.6.2.1. Recapitalize forest resourcesInvestment inSoutheast Asia’sforests is requiredto maintain theflow of goods andservicesTo maintain ecosystem services, reduce carbon emissions, improvewatershed protection and support biodiversity conservationand future economic production, recapitalization of GMS forestresources is essential. Across the subregion, falling forest area,low and declining stocking densities in natural forests and poorlyperforming plantation resources mean that significant investmentwill be required. Three areas for potential investment are loggedoverproduction forests, heavily degraded forests and plantedforests:• At present the economic viability of management of loggedovernatural forest for second and third cutting cycles isin question and many commentators doubt that naturalforests can be sustainably managed using the silviculturaland harvesting techniques that are commonly in practice.As such, forest protection may be necessary for several yearsbefore forests recover to a sufficient extent to be returned toproduction on a more sustainable footing.• The productivity of planted forests in the GMS is considerablybelow potential as a result of inadequate extension, low qualityplanting material and inappropriate institutional measures. InAsia as a whole, the 125 million hectares of planted forestsin 2005 had an estimated potential production of about 495million cubic metres; over twice the total reported productionof industrial roundwood (Carle and Holmgren 2008).Improvements in plantation production of timber could havesignificant effects on demand of timber from natural forestsand would also provide green building material with a carbonfootprint much smaller than substitute products such asconcrete, steel and aluminium.• The millions of hectares of Imperata grassland and heavilydegraded forests in the GMS may become economicallyviable sites for plantation development and assisted natural143

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional report• regeneration if newly developed financing mechanismsprove workable. Methods for reforesting these areas are wellknown and could be extended to large tracts of land whereinstitutional backing is provided.Investment inforestry can alsoincrease ruralemploymentSupportiveinvestmentframeworks are,however, essentialInvesting in forest resource recapitalization can also be seen asa means of generating rural employment and will be especiallyattractive if the economic downturn is protracted and returns frominvestments in industrial and services sectors fall. Such measuresto promote employment have been implemented on differentoccasions around the world in response to resource depletionand low economic productivity – during economic depressionsor following wars for example. Resulting resource bases havepowered subsequent economic booms based on manufacturing.Similar long-sighted decisions could provide good prospects forfuture growth whether or not times of economic hardship arerealized. Under low growth conditions it is probable that privatesector investment will fall and, where financial markets lacksufficient depth, it is likely that funding will have to be derivedfrom international mechanisms or core government funds.In all cases, recapitalization is only likely to come about or tobe supported where investment frameworks are appropriateand include stable and clear tenure rights, supportive financingarrangements and legislation, appropriate scientific and technicalinputs and reduced bureaucratic interference. For many years,these issues have resulted in degradation of forest resources andrectification of weaknesses can result in widespread benefits.Experience from countries where such programmes have beenundertaken will bring increased clarity in relation to the relativebenefits of different approaches and practices.6.2.2. Conserve forest biodiversityForest biodiversitywill remain undersevere threatThroughout Southeast Asia maintaining biodiversity will posean almost insurmountable task and some losses are inevitable.Climate change also threatens forest ecosystem stability and,with increased infrastructure development and expansion ofpopulations, reductions in the health and vitality of forestscould result in compound impacts on forest resources andthose dependent upon them. As well as deforestation and forestdegradation, the porosity of national borders and park boundaries,and huge demands for wildlife and plants for food, medicine andother uses, will mean a constant drain on populations of marketablespecies. Increased accessibility of previously more isolated areasas roads are constructed will exacerbate rates of depletion whereimplementation of environmental safeguards is lax.144

BRINGING ABOUT CHANGEImprovementsin financing, lawenforcement andawareness arenecessaryMore effort isneeded to mitigatethe impactsof economicdevelopmentProtected areas remain the cornerstone of forest biodiversityand although there are exceptions, deforestation and forestdegradation within protected areas are less than in surroundinglandscapes. In particular, there is a great need to increase forestlaw enforcement and awareness-raising efforts and to improvefinancing for protected areas – particularly in relation to staffingand management planning. Establishment of checkpoints, patrols,border controls and other law enforcement interventions canprovide effective support for protected areas although withouthigh-level political backing time and effort are likely to be wasted.Several international financing mechanisms are likely sources offunding for national parks and should be utilized to the extentpossible.Improvements in relation to monitoring of development activitiesare also of key importance. Implementation of environmentalsafeguards in association with major infrastructure developments– both domestically and donor funded – is an outstanding area inneed of attention. Greater efforts should also be made in placingrural roads according to environmental sensitivity and ensuringprotection of protected areas around new developments.6.2.3. Utilize available incentivesCurrentopportunities mustbe seized uponMarketing ofmultiple valueswill bring multiplebenefitsHeightened global interest in forests and forestry constitutesthe greatest opportunity in recent times for the forestry sectorto deliver on society’s priorities. Financial mechanisms aimed atpromoting SFM could be converted into new growth in forestrywith the involvement of many new participants. Similarly, legalityrelatedregulations aimed at imports of forest products to highpayingmarkets provide an incentive to promote SFM. Publicprocurement policies and corporate decisions implemented byinternational companies and governments will provide parallelmotivation. Failing to attain necessary standards would meanthat producers and manufacturers will have to find new, possiblylower paying markets where poor forest management remainsacceptable.Marketing of forests and forestry as producers of valuable timber,carbon sequestration, conservation, watershed protectionand rural employment could bring many direct and peripheralbenefits that are not being realized through current marketingsystems. Forest rangers, tour operators and guides, nationalforest certification officers, GIS experts, harvesting trainers, forestlabourers, wood products manufacturers and community fireofficers could all benefit from altered patterns of incentives.145

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportInvestment inacquisition offinancial resourcesshould beconsideredGiven the opportunities that now exist, funnelling start-upinvestment into accessing and acquiring additional financingwould seem appropriate. In particular, investment in humanresources to seek financing – both from the public and privatesectors – administer funding applications, manage programmeimplementation and promote resulting achievements, is likely tobe money well spent.6.2.4. Involve stakeholdersInclusiveness is The challenges that face forestry – with respect to climate changeessentialand otherwise – and the difficulties of implementing morecomplex forest policy through a regulatory approach suggest thatmuch greater inclusion of forestry stakeholders at different levelsis necessary.Traditional forms of forest governance that focuson hierarchical, top-down policy formulation andimplementation by the nation state and the use of regulatorypolicy instruments are insufficiently flexible to meet thechallenges posed by climate change. (Seppälä et al. 2009)Withoutconsultationduringformulation,policy may beunworkablePublic opinionshould play alarger role inforestryWider inputscan transformstagnant processesand institutionsNational and international forestry policy has often emergedfrom processes that fail to assess or accommodate public – i.e.,stakeholder – opinion. Differing objectives are supported bygovernments, powerful interests, environmentalists, economistsand international organizations. Policy is, however, often poorlyunderstood or supported by a broader range of stakeholders andthis partly accounts for the poor implementation of forestry policyacross the subregion. Failure to garner greater participation inthe policy process inevitably weakens policy implementation andleads to lack of general enforcement support. Furthermore, andpartly as a result of a lack of public engagement, policy processesmay become dominated by powerful interests, internationalconcerns and perverse causes.As such, public opinion should play a larger role in forestrydevelopment so that policies are appropriate, are broadlysupported and can be more easily implemented in a rapidlychanging subregion. Presently, the question of how importantforests are to local livelihoods is rarely put to those directlyaffected. Likewise, at the national level, the importance of foreststo urban dwellers is poorly quantified. Levels of awareness of theroles and importance of forestry are similarly unknown and, assuch, the potential of public support remains poorly tappedAssessment of awareness of, and opinion on, forests andforestry can deliver the perceptions of a broad range of forestrystakeholders to the policy development process. Collated resultsenable formulation of policy that is well harmonized with currentneeds and wants and can also be used to inform prospectiveawareness-raising campaigns. Bringing wider perceptions into146

BRINGING ABOUT CHANGEpolicy processes is also likely to help precipitate institutionalreform and reinvention.6.2.5. Reinvent forestry institutionsInstitutions haveoften lost focus onpractical issuesGreaterinvolvement ofstakeholderscan precipitatemultiple shifts ininstitutional rolesOver past decades, forest and forestry policies have beenformulated to encompass the principles of SFM in almost allcountries in the subregion. Implementation has, however, beenlacking in all but a few. Despite all the credentials of ‘good’ forestpolicy, many examples in the subregion are simply text bookmodels of forest policy, inappropriate for the circumstancesinto which they were born. This has largely resulted from alogical disjuncture between goals and possibility/capability forachievement of the stated goals. Recognition of this deficiencyand refocusing of institutions to play an appropriate role ineffectively and efficiently meeting policy goals is essential tomove the subregion’s forestry sector in parallel with widerdevelopments. To a large extent this will involve refocusing onfield-level forestry issues and what can realistically be achieved.Capabilities in terms of human resources, available knowledge,political will and financial support will have to be taken intoaccount much more seriously if widespread adoption of policyaims is to come about.Gradual shifts towards local participation, greater stakeholderinvolvement and transparency, and individual and householdownership of forests also mean that many more factors will playdeciding roles in the future of forestry by 2020. This will havethe effect of promoting institutions to adopt facilitative andregulatory, rather than direct management roles. Facilitating andregulating the many, as opposed to managing the few, will be avery different task for forestry agencies in much of the subregion.Human resource development at the policy level is likely to bea key need for this transition to take place. Movement awayfrom direct management of forests will also mean that highlevelintegration and intersectoral coordination will be of muchgreater importance for forestry agencies to retain a raison d’etre.Such transitions are likely to consolidate the roles of forestryagencies, even if the role is considerably altered.To be successful and remain relevant, institutions needto ensure flexibility, strategic management capabilities,strong “sensory” capacities and an institutional culturethat responds to change. (FAO 2008d)Responsivenessand flexibility arethe most importantqualities forestryinstitutions canpossessGlobal and regional experience demonstrates that points ofinflection in forestry trends often occur due to the emergenceof tangible economic, political or social ‘shocks’. Forecasts andreasoned argument are often insufficient to effect change,especially where governance is weak and other pressing mattersare at hand. Environmental degradation is also often an insufficient147

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportcatalyst unless acute social and economic repercussions areexperienced. When shocks do occur, however, the most importantqualities institutions can possess in steering an efficient coursefor society are responsiveness and flexibility. Although decisionsmust be well informed – both technically and politically – for longtermadvantages to be realized, rapid responses to threats andopportunities and the ability to redesign and realign objectivesconfer distinct advantages in maintaining forestry agencies andtheir contribution to society.6.2.6. Revitalize field-level forestryField-level forestryactivities are indanger of beingoverlookedLocal-level firemanagementis of increasingimportanceCodes of practiceprovide apractical means ofimproving forestmanagementMany of the day to day field-level activities that physicallydetermine the future of forests and forestry are often overlookedin national and international discussions: reduced impact logging;forest patrolling; community fire management; forest demarcation;collection of forest statistics; monitoring of forest health and vitality;growing timber; collecting fuelwood and NWFPs; manufacturingproducts; etc. The present enthusiasm for climate change andforest law enforcement and governance, although inspiring,seemingly denies the importance of these activities. Withoutfocus on practical aspects of forestry, however, it is possible thatby the time the international focus generates major implications,a protracted period of institutional strengthening and training willbe required for implementation to be realized.Due to increased opening and drying of the subregion’s forests,changing weather patterns and rising risk of anthropogenicignition, there is a strong need to improve fire management to avoidlarge losses of forest and ecosystem collapse. Fire managementcan be improved through information and awareness campaigns,improved legislation and faster fire response. Regional and nationalcommunication networks and monitoring schemes may also benecessary, as well as specific management practices at the locallevel (e.g., controlled burning and sanitary cuts).There are also a number of additional initiatives within foresters’control that could be implemented to improve field-level forestmanagement. Amongst these are voluntary codes of practice,which seek to provide benchmark standards to guide forestmanagers. Codes of practice for forest harvesting address thetechnical quality of harvesting in natural forests – an area inwhich positive economic and environmental benefits can begenerated. Codes have also been developed for fire managementand for planted forests, and the economic and ecological logicof implementing these codes should act as the main incentive inencouraging their uptake and expanding the sphere in which SFMis practised. Criteria and indicators for SFM can similarly serve toconvert policy intention into action.148

BRINGING ABOUT CHANGE6.2.7. Improve educationEducation isnecessary toincrease awarenessand addresshuman resourcelimitationsThe nextgenerationwill need to be‘environmentallysmarter’Modern forestmanagement alsocalls for improvededucationThe long time scales over which national-level changes occurstrongly suggest that education in relation to the values of forestsand the opportunities and challenges faced should be a key focusin the GMS. The current lack of human resources in many countriesalso points to a clear need to improve education in a general senseand also to increase awareness in relation to forests and naturalresources.The subregion’s growing population and the skew towards youngergenerations place greater emphasis on the need for improvededucation and awareness. Without an ‘environmentally smarter’next generation of consumers and decision-makers, it is likely thatresources will be irretrievably eroded through population pressureand environmentally sustainable practices will not take off.More immediately, the current lack of human resource capacityin forestry and increasing complexity of forest management,including linkages with climate change especially, imply that highquality education and training should be made available to thoseworking in forestry and related disciplines at local, provincial andnational levels.149

Asia-Pacific Forestry Sector Outlook Study IIThe Greater Mekong Subregional reportAPPENDIX I. CHANGES IN WORLD BANK GOVERNANCE INDICATORS IN GMSCOUNTRIES, 1998-2008IndicatorGovernance Score(-2.5 to +2.5)PercentileRank (0-100)Change inrank1998 2008 2008 1998-2008Control of corruptionCambodia -1.0 -1.1 8.6 -3.1Lao PDR -0.7 -1.2 5.7 -22.5Myanmar -1.4 -1.7 0.9 -3.5Thailand 0.0 -0.4 42.9 -14.9Viet Nam -0.7 -0.8 25.1 -3.5Rule of LawCambodia -1.0 -1.1 13.3 -1.0Lao PDR -0.9 -0.9 20.0 4.8Myanmar -1.3 -1.5 4.7 -2.4Thailand 0.4 0.0 54.0 -11.7Viet Nam -0.5 -0.4 41.6 3.0Regulatory qualityCambodia -0.2 -0.5 34.2 -7.8Lao PDR -1.0 -1.2 9.6 -5.0Myanmar -1.5 -2.2 0.9 -6.4Thailand 0.2 0.3 59.9 4.3Viet Nam -0.6 -0.5 32.3 7.9Government effectivenessCambodia -0.8 -0.8 19.4 -1.5Lao PDR -0.6 -0.8 17.5 -7.1Myanmar -1.2 -1.7 1.8 -5.3Thailand 0.1 0.1 58.7 -1.0Viet Nam -0.6 -0.3 45.4 16.5Political stabilityCambodia -1.2 -0.3 34.4 21.4Lao PDR -0.3 0.0 43.5 11.8Myanmar -1.3 -1.6 9.0 -3.0Thailand 0.4 -1.2 12.9 -46.7Viet Nam 0.3 0.3 56.4 -2.3Voice and accountabilityCambodia -0.9 -0.9 22.5 0.9Lao PDR -1.0 -1.7 6.2 -11.1Myanmar -1.9 -2.2 0.0 -1.4Thailand 0.4 -0.6 32.2 -28.9Viet Nam -1.4 -1.6 6.7 -3.9Source: http://info.worldbank.org/governance/wgi/150

APPENDIXAPPENDIX II. WOOD PRODUCTS PRODUCTION PROJECTIONS FOR GMS COUNTRIES.Table 6.1. Industrial roundwood production 1990-2020IRW productionProjections(000 m 3 )Baseline scenarioDownturn scenario1990 2000 2005 2010 2015 2020 2010 2015 2020Cambodia 567 179 113 177 270 419 145 198 273Lao PDR 455 567 194 498 644 841 457 545 656Myanmar 3 653 3 612 4 262 5 677 6 748 7 668 5 348 6 024 6 559Thailand 3 093 6 262 8 700 8 849 9 484 10 296 8 508 8 706 8 939Viet Nam 4 669 4 183 4 754 5 787 7 152 8 217 5 346 6 247 6 921GMS 12 437 14 803 18 023 20 988 24 298 27 441 19 804 21 720 23 348Source: Jonsson and Whiteman (2009).Table 6.2. Sawnwood production 1990-2020Sawnwood production(000 m 3 )Baseline scenarioProjectionsDownturn scenario1990 2000 2005 2010 2015 2020 2010 2015 2020Cambodia 71 20 4 34 56 92 26 38 56Lao PDR 100 200 130 222 313 440 198 256 329Myanmar 296 545 1 530 1 538 1 599 1 633 1 502 1 529 1 534Thailand 1 170 220 288 308 379 501 298 349 432Viet Nam 896 2 950 3 232 3 419 4 136 4 728 3 225 3 734 4 143GMS 2 533 3 935 5 184 5 521 6 483 7 394 5 249 5 906 6 494Source: Jonsson and Whiteman (2009).Table 6.3. Wood-based panel production 1990-2020Panel production(000 m 3 )Baseline scenarioProjectionsDownturn scenario1990 2000 2005 2010 2015 2020 2010 2015 2020Cambodia 2 44 7 9 13 20 8 11 14Lao PDR 10 25 24 22 25 28 22 23 25Myanmar 15 56 113 135 146 159 131 140 149Thailand 449 1 158 1 365 1 580 1 927 2 451 1 503 1 753 2 105Viet Nam 39 40 441 319 434 548 286 355 420GMS 515 1 323 1 950 2 065 2 545 3 206 1 950 2 282 2 713Source: Jonsson and Whiteman (2009).Table 6.4. Paper and paper board production 1990-2020Production(000 tonnes)Baseline scenarioProjectionsDownturn scenario1990 2000 2005 2010 2015 2020 2010 2015 2020Cambodia 0 0 0 0 0 0 0 0 0Lao PDR 0 0 0 0 0 0 0 0 0Myanmar 11 39 45 65 94 144 58 75 104Thailand 877 2 312 3 431 4 113 5 100 6 710 3 940 4 634 5 699Viet Nam 57 384 888 1 106 1 427 1 734 1 001 1 199 1 385GMS 945 2 735 4 364 5 284 6 621 8 588 4 999 5 908 7 188Source: Jonsson and Whiteman (2009).151

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